Dynamic structure - Dynamic results? Re-estimating profit shifting with historical ownership data

Philipp Grosskurth

No 811, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: Ownership structures of multinational enterprises are commonly assumed to remain constant over time, both due to a lack of easily accessible panel data and to facilitate empirical analyses. This paper discusses the validity of this assumption and assesses its relevance in the context of profit shifting. A new method of reconstructing historical ownership information in Bureau van Dijk's ORBIS database reveals a highly dynamic environment. The validity of the assumption collapses with increasing panel length; ownership structures are rarely constant over time. Moreover, about 9 percent of firms with observed ownership data change owners in each year. The relevance of the assumption is tested by re-estimating indirect measures of profit shifting for selected benchmark samples. Assuming ownership structures as constant has a strong impact on sample composition, adding almost 29 percent of additional observations compared to historical ownership data. In the context of profit shifting, estimates based on constant ownership data are found to be larger in absolute magnitude compared to estimates based on historical ownership data.

Keywords: ORBIS; historical ownership data; MNE; profit shifting (search for similar items in EconPapers)
JEL-codes: F23 H25 H26 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:811

DOI: 10.4419/86788940

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