The Resource Restricted interest deductibility and multinationals' use of internal debt finance

Restricted interest deductibility and multinationals' use of internal debt finance

Label
Restricted interest deductibility and multinationals' use of internal debt finance
Title
Restricted interest deductibility and multinationals' use of internal debt finance
Creator
Subject
Language
eng
Summary
This paper reconsiders the role of interest deductibility for internal debt financing of multinational enterprises (MNEs). The authors 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 MNEs. The 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
Citation source
In: International tax and public finance. - New York. - Vol. 23 (2016), no. 5 ; p. 785-797
http://library.link/vocab/creatorName
  • Buettner, T
  • Overesch, M
  • Wamser, G
Geographic coverage
International
Language note
English
http://library.link/vocab/subjectName
  • interest deduction
  • debt capital
  • MNE
  • thin capitalization
  • intra-group financing
Label
Restricted interest deductibility and multinationals' use of internal debt finance
Instantiates
Publication
Label
Restricted interest deductibility and multinationals' use of internal debt finance
Publication

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