Firm performance following foreign acquisitions in Norway: Evidence of profit shifting?**

Bakke Julia Tropina ()
Additional contact information
Bakke Julia Tropina: SNF—Center for Applied Research at NHH, and NOCET, NHH Norwegian School of Economics, Helleveien 30, N-5045 Bergen, Norway

Nordic Tax Journal, 2023, vol. 2023, issue 1, 1-21

Abstract: The paper examines what happened to the profitability of foreign-acquired firms following acquisition in Norway in the period 1994–2005. Propensity score matching combined with a difference-in-difference estimator is used to show that the profitability of the firms acquired goes down significantly following the acquisition. Cost elements, driving the lower profitability of the foreign-acquired firms, are the elements that could reflect transfer price manipulations. Furthermore, the results indicate that despite deteriorating financial performance, there is no significant change in the operating efficiency, liquidity, or solvency of the acquired firms. This may indicate that the observed changes in profitability can be explained by profit shifting activities of the acquired firms.

Keywords: Profit shifting; transfer pricing; multinational companies; propensity score matching (search for similar items in EconPapers)
JEL-codes: F23 H25 H26 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.2478/ntaxj-2023-0001 (text/html)

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:vrs:notajo:v:2023:y:2023:i:1:p:1-21:n:2

DOI: 10.2478/ntaxj-2023-0001

Access Statistics for this article

Nordic Tax Journal is currently edited by Axel Hilling

More articles in Nordic Tax Journal from Sciendo
Bibliographic data for series maintained by Peter Golla ().