EconPapers    
Economics at your fingertips  
 

Firm Responses to an Interest Barrier: Empirical Evidence

Jarkko Harju (), Ilpo Kauppinen () and Olli Ropponen ()

No 90, Working Papers from VATT Institute for Economic Research

Abstract: This paper studies the effects of an interest barrier that was introduced in Finland to restrict the profit-shifting opportunities of multinational enterprises (MNEs). We employ full population data of Finnish, Swedish and Danish MNEs and a difference-in-differences methodology, where Swedish and Danish MNEs serve as a control group. We find that Finnish MNEs responded to the interest barrier by decreasing their financial expenses. Subsidiaries decreased also their longterm debt levels. We do not find evidence of debt-shifting being replaced by transfer pricing. Neither do we find evidence of changes in output, suggesting that the interest barrier did not create distortions by affecting the real activity of MNEs.

Keywords: corporate taxation; multinational companies; yritysverotus; monikansalliset yritykset; pääomarakenne; korkovähennysrajoitus; Business regulation and international economics; G32; H25; H26 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
https://www.doria.fi/handle/10024/148927

Related works:
Working Paper: Firm Responses to an Interest Barrier: Empirical Evidence (2017) Downloads
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:fer:wpaper:90

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Papers from VATT Institute for Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by Anita Niskanen ().

 
Page updated 2019-04-18
Handle: RePEc:fer:wpaper:90