The Effects of Taxation on the Location Decision of Multinational Firms: M&a Versus Greenfield Investments
Shafik Hebous (),
Martin Ruf and
Alfons Weichenrieder ()
National Tax Journal, 2011, vol. 64, issue 3, 817-38
In this study, we estimate the impact of differences in international tax rates on the probability of choosing a location for an affiliate of a multinational firm. In particular, we distinguish between the tax sensitivity of Greenfield and Mergers and Acquisitions (M&A) investments. Based on a novel firm-level dataset on German outbound foreign direct investment (FDI), we find evidence that location decisions of M&A investments are less sensitive to differences in tax rates than location decisions of Greenfield investments. According to our logit estimates, after controlling for firm and country-specific characteristics, the tax elasticity for Greenfield investments is negative and in absolute value significantly larger than that associated with M&A investments. This finding is consistent with (partial) capitalization of taxes in the acquisition price when the FDI project takes the form of a M&A.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (37) Track citations by RSS feed
Downloads: (external link)
https://www.ntanet.org/NTJ/64/3/ntj-v64n03p817-38- ... ocation-decision.pdf (application/pdf)
https://www.ntanet.org/NTJ/64/3/ntj-v64n03p817-38- ... cation-decision.html (text/html)
Access to most recent volumes (current and past two years) is restricted to subscribers and members of the National Tax Association.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ntj:journl:v:64:y:2011:i:3:p:817-38
Access Statistics for this article
National Tax Journal is currently edited by Stacy Dickert-Conlin and William M. Gentry
More articles in National Tax Journal from National Tax Association, National Tax Journal Contact information at EDIRC.
Bibliographic data for series maintained by Sally Sztrecska ().