The impact of thin-capitalization rules on the capital structure of multinational firms

Thiess Buettner, Michael Overesch, Ulrich Schreiber and Georg Wamser
Authors registered in the RePEc Author Service: Thiess Büttner

Journal of Public Economics, 2012, vol. 96, issue 11, 930-938

Abstract: This paper analyzes the effectiveness of limitations of the tax deductibility of interest expenses for multinational corporations, so-called thin-capitalization rules. The empirical investigation exploits a large micro-level panel dataset of multinational firms to analyze the effects of thin-capitalization rules on the capital structure of foreign subsidiaries located in OECD countries in the time period between 1996 and 2004. The findings indicate that thin-capitalization rules effectively reduce the incentive to use internal loans for tax planning but result in higher external debt.

Keywords: Corporate income tax; Multinational firms; Capital structure; Thin-capitalization rules; Firm-level data (search for similar items in EconPapers)
JEL-codes: G32 H25 H26 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (129)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0047272712000710
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:pubeco:v:96:y:2012:i:11:p:930-938

DOI: 10.1016/j.jpubeco.2012.06.008

Access Statistics for this article

Journal of Public Economics is currently edited by R. Boadway and J. Poterba

More articles in Journal of Public Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().