Taxes and Decision Rights in Multinationals

Søren Bo Nielsen (), Pascalis Raimondos-Møller () and Guttorm Schjelderup ()
Additional contact information
Søren Bo Nielsen: Department of Economics, Copenhagen Business School, Postal: Copenhagen Business School, Department of Economics, Porcelænshaven 16A, 1.fl., 1.85, 2000 Frederiksberg, Denmark, http://www.cbs.dk/staff/sorenbonielsen

No 2007/11, Discussion Papers from Department of Finance and Management Science, Norwegian School of Economics and Business Administration

Abstract: We examine how a multinational’s choice to centralize or de-centralize its decision structure is affected by country tax differentials. Within a simple model that emphasizes the multiple conflicting roles of transfer prices in MNEs — here, as a strategic pre-commitment device and a tax manipulation instrument —, we show that decentralization is preferred in case of small tax differentials, whereas centralization can be more profitable, when tax differentials are large. In essence, the organizational flexibility of MNEs is triggered by the scope for tax minimization. Our analysis allows for both commitment and non-commitment to transfer prices, and for alternative modes of competition.

Keywords: Centralized vs. de-centralized decisions; taxes; transfer prices; MNEs (search for similar items in EconPapers)
JEL-codes: F23 H25 L23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe
Date: 2007-03-27
View list of references View citations in EconPapers

Downloads: (external link)
http://www.nhh.no/for/dp/2007/1107.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found

Related works:
Working Paper: Taxes and Decision Rights in Multinationals (2006)
Working Paper: Taxes and Decision Rights in Multinationals (2006)
Journal Article: Taxes and Decision Rights in Multinationals (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:hhs:nhhfms:2007_011

Access Statistics for this paper

More papers in Discussion Papers from Department of Finance and Management Science, Norwegian School of Economics and Business Administration
Address: NHH, Department of Finance and Management Science, Helleveien 30, N-5045 Bergen, Norway
Contact information at EDIRC.
Series data maintained by Stein Fossen ().