Article ID Journal Published Year Pages File Type
969169 Journal of Public Economics 2012 9 Pages PDF
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.

Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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