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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/19076
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| Title: | | Taxation and the financial structure of German outbound FDI  |
| Authors: | | Mintz, Jack Weichenrieder, Alfons J. |
| Issue Date: | | 2005 |
| Series/Report no.: | | CESifo working papers 1612 |
| Abstract: | | The paper analyzes the financial structure of outbound FDI during the period 1996-2002 by drawing on up to 54,022 firm-year observations of 13,758 German-owned subsidiaries. We find that the tax rate in the host country has a sizeable and significantly positive effect on leverage for wholly-owned foreign unlike partially-owned foreign companies. Most of the effect comes from increased intra-company borrowing, while third-party debt is not significantly affected by tax differences. While wholly-owned subsidiaries react more sensitively to tax rate differentials, they are less sensitive to macroeconomic influences like interest rates. |
| Subjects: | | foreign direct investment financial structure capital structure taxation |
| JEL: | | H25 F23 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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