Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/38940
Authors: 
Hebous, Shafik
Ruf, Martin
Weichenrieder, Alfons J.
Year of Publication: 
2010
Series/Report no.: 
CESifo working paper Public Finance 3076
Abstract: 
In this study, we estimate the impacts of differences in international tax rates on the probability of choosing a location for an affiliate of a multinational firm. In particular, we distinguish between the tax sensitivity of Greenfield and M&A investments. Based on a novel firm-level dataset on German outbound FDI, we find evidence that location decisions of M&A investments are less sensitive to differences in tax rates than location decisions of Greenfield investments. According to our logit estimates, and after controlling for firm and country-specific characteristics, the tax elasticity for Greenfield investments is negative and in absolute value significantly larger than that associated with M&A investments. This finding is consistent with a (partial) capitalisation of taxes in the acquisition price when the FDI project takes the form of M&A.
Subjects: 
FDI
corporate taxation
location
M&A
Greenfield
JEL: 
H25
H73
F23
Document Type: 
Working Paper

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