Buettner, Thiess, Overesch, Michael and Wamser, Georg (2016). Restricted interest deductibility and multinationals' use of internal debt finance. Int. Tax Public Financ., 23 (5). S. 785 - 798. DORDRECHT: SPRINGER. ISSN 1573-6970

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Abstract

This paper reconsiders the role of interest deductibility for internal debt financing of multinational corporations (MNCs). We provide quasi-experimental evidence using restrictions on interest deductibility through thin-capitalization rules. Explicitly distinguishing between firms subject to a binding restriction and unrestricted firms, a panel data sample selection model is used to explore the tax sensitivity of the capital structure of foreign subsidiaries of MNCs. Our results confirm that the tax incentive for using internal loans is effectively removed for restricted subsidiaries. While internal debt financing of unrestricted subsidiaries positively responds to taxes, the effects are relatively small.

Item Type: Journal Article
Creators:
CreatorsEmailORCIDORCID Put Code
Buettner, ThiessUNSPECIFIEDUNSPECIFIEDUNSPECIFIED
Overesch, MichaelUNSPECIFIEDUNSPECIFIEDUNSPECIFIED
Wamser, GeorgUNSPECIFIEDUNSPECIFIEDUNSPECIFIED
URN: urn:nbn:de:hbz:38-261898
DOI: 10.1007/s10797-015-9386-8
Journal or Publication Title: Int. Tax Public Financ.
Volume: 23
Number: 5
Page Range: S. 785 - 798
Date: 2016
Publisher: SPRINGER
Place of Publication: DORDRECHT
ISSN: 1573-6970
Language: English
Faculty: Unspecified
Divisions: Unspecified
Subjects: no entry
Uncontrolled Keywords:
KeywordsLanguage
THIN-CAPITALIZATION RULES; STRUCTURE CHOICE; TAXATION; IMPACT; FIRMSMultiple languages
EconomicsMultiple languages
Refereed: Yes
URI: http://kups.ub.uni-koeln.de/id/eprint/26189

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