Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
969169 | Journal of Public Economics | 2012 | 9 Pages |
Abstract
This paper analyzes the effectiveness of limitations of the tax deductibility of interest expenses for multinational corporations, so-called thin-capitalization rules. The empirical investigation exploits a large micro-level panel dataset of multinational firms to analyze the effects of thin-capitalization rules on the capital structure of foreign subsidiaries located in OECD countries in the time period between 1996 and 2004. The findings indicate that thin-capitalization rules effectively reduce the incentive to use internal loans for tax planning but result in higher external debt.
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Authors
Thiess Buettner, Michael Overesch, Ulrich Schreiber, Georg Wamser,