Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/79749
Authors: 
Schindler, Dirk
Møen, Jarle
Schjelderup, Guttorm
Tropina, Julia
Year of Publication: 
2013
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2013: Wettbewerbspolitik und Regulierung in einer globalen Wirtschaftsordnung - Session: Taxation of Multinationals D06-V2
Abstract: 
Multinational companies can exploit the tax advantage of debt more aggressively than national companies. Besides utilizing the standard debt tax shield, multinationals can shift debt from affiliates in low-tax countries to affiliates in high-tax countries. We study the capital structure of multinationals and expand previous theory by incorporating debt tax shield effects from both internal and external capital markets. A main finding is that firm value is maximized if both internal and external debt is used, and that internal lending should be conducted through a financial center in the lowest-taxed affiliate. Testing our model using a large panel of German multinationals, we identify all three debt tax shields. Our estimates suggest that internal and external debt shifting are of about equal relevance.
JEL: 
H25
G32
F23
Document Type: 
Conference Paper

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