Economics at your fingertips  

Why is the Response of Multinationals' Capital-Structure Choice to Tax Incentives That Low? Some Possible Explanations

Martin Ruf

FinanzArchiv: Public Finance Analysis, 2011, vol. 67, issue 2, 123-144

Abstract: This paper evaluates three possible explanations for why empirical studies have found a quite moderate response of multinationals' capital structure to tax incentives. Firstly, by concentrating on debt decisions by operating subsidiaries, previous studies may have overlooked the importance of holding companies. Secondly, international transfer-pricing guidelines may reduce the tax incentives for debt financing. And thirdly, debt as a tax planning tool may be especially used by large multinationals. Whereas I do not find empirical evidence in favor of the third hypothesis, I do find empirical evidence for the first and the second hypothesis.

Keywords: business taxation; tax planning; leverage; corporate finance (search for similar items in EconPapers)
JEL-codes: H25 G32 M41 F23 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed

Downloads: (external link) ... 1628001522111x588763 (text/html)
Fulltext access is included for subscribers to the printed version.

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:

Ordering information: This journal article can be ordered from
Mohr Siebeck GmbH & Co. KG, P.O.Box 2040, 72010 Tübingen, Germany

DOI: 10.1628/001522108X588763

Access Statistics for this article

FinanzArchiv: Public Finance Analysis is currently edited by Alfons Weichenrieder, Ronnie Schöb and Jean-François Tremblay

More articles in FinanzArchiv: Public Finance Analysis from Mohr Siebeck, Tübingen
Bibliographic data for series maintained by Thomas Wolpert ().

Page updated 2020-04-03
Handle: RePEc:mhr:finarc:urn:sici:0015-2218(291106)67:2_123:witrom_2.0.tx_2-4