EconPapers    
Economics at your fingertips  
 

International Debt Shifting: The Value Maximizing Mix of Internal and External Debt

Jarle Møen (), Dirk Schindler (), Guttorm Schjelderup () and Julia Tropina Bakke ()
Additional contact information
Julia Tropina Bakke: SNF - Centre for Applied Research at NHH, Postal: SNF, Helleveien 30, N-5045 Bergen, Norway

No 2019/1, Discussion Papers from Norwegian School of Economics, Department of Business and Management Science

Abstract: We study the capital structure of multinationals and expand previous theory by incorporating international debt tax shield effects from both internal and external capital markets. We show that: (i) multinationals' firm value is maximized if both internal and external debt are used to save tax; (ii) the use of internal and external debt is independent of each other; (iii) multinationals have a tax advantage over domestic firms, which cannot shift debt across international borders. We test our model using a large panel of German multinationals and find that internal and external debt shifting are of about equal importance.

Keywords: Corporate taxation; multinationals; capital structure; international debt-shifting; tax avoidance (search for similar items in EconPapers)
JEL-codes: F23 G32 H25 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc and nep-cfn
Date: 2019-03-29
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/11250/2592998 Full text (application/pdf)

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:hhs:nhhfms:2019_001

Access Statistics for this paper

More papers in Discussion Papers from Norwegian School of Economics, Department of Business and Management Science NHH, Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway. Contact information at EDIRC.
Bibliographic data for series maintained by Stein Fossen ().

 
Page updated 2019-10-21
Handle: RePEc:hhs:nhhfms:2019_001