The effect of international income shifting on the link between real investment and corporate taxation

Mário Marques, Carlos Pinho and Tânia Menezes Montenegro

Journal of International Accounting, Auditing and Taxation, 2019, vol. 36, issue C, -

Abstract: Prior literature suggests that decisions on the location of investments are affected by corporate taxation and that companies relocate income in order to minimize their tax bill. However, there is little literature analyzing the relation between these two decisions. This study assesses the extent to which real investment responsiveness to corporate taxation is affected by cross-border income shifting. More precisely, it evaluates whether the tax responsiveness of real investment is lower in the presence of international income shifting activities proxied by intangible assets held by corporate groups. Using a sample of European foreign subsidiaries for the 2001–2015 period, the results suggest that the increasing ability to shift income out of higher-tax countries makes the sensitivity of real investment less responsive to a host country’s corporate taxation.

Keywords: European foreign subsidiaries; Corporate taxation; Real investment; International income shifting; Intangible assets (search for similar items in EconPapers)
JEL-codes: D22 F23 H25 H32 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S106195181830065X
Full text for ScienceDirect subscribers only

Related works:
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: https://EconPapers.repec.org/RePEc:eee:jiaata:v:36:y:2019:i:c:2

DOI: 10.1016/j.intaccaudtax.2019.100268

Access Statistics for this article

Journal of International Accounting, Auditing and Taxation is currently edited by R. Larson

More articles in Journal of International Accounting, Auditing and Taxation from Elsevier
Bibliographic data for series maintained by Catherine Liu ().