Achtung: hohPublica wurde am 18.11.2024 aktualisiert. Falls Sie auf Darstellungsfehler stoßen, löschen Sie bitte Ihren Browser-Cache (Strg + Umschalt + Entf). *** Attention: hohPublica was last updated on November 18, 2024. If you encounter display errors, please delete your browser cache (Ctrl + Shift + Del).
 

A new version of this entry is available:

Loading...
Thumbnail Image
ResearchPaper
2011

Earnings shocks and tax-motivated income-shifting : evidence from European multinationals

Abstract (English)

This paper presents a new approach to estimating the existence and magnitude of taxmotivated income shifting within multinational corporations. Existing studies of income shifting use changes in corporate tax rates as a source of identification. In contrast, this paper exploits exogenous earnings shocks at the parent firm and investigates how these shocks propagate across low-tax and high-tax multinational subsidiaries. This approach is implemented using a large panel of European multinational affiliates over the period 1995-2005. The central result is that parents? positive earnings shocks are associated with a significantly positive increase in pretax profits at low-tax affiliates, relative to the effect on the pretax profits of high-tax affiliates. The result is robust to controlling for various other differences between low-tax and high-tax affiliates and for country-pair-year fixed effects. Additional tests suggest that the estimated effect is attributable primarily to the strategic use of debt across affiliates. The magnitude of income shifting estimated using this approach is substantial, but somewhat smaller than that found in the previous literature.

File is subject to an embargo until

This is a correction to:

A correction to this entry is available:

This is a new version of:

Notes

Publication license

Publication series

FZID discussion papers; 24

Published in

Faculty
Faculty of Business, Economics and Social Sciences
State Institutes
Institute
Institute of Economics
Forschungszentrum Innovation und Dienstleistung

Examination date

Supervisor

Edition / version

Citation

DOI

ISSN

ISBN

Language
English

Publisher

Publisher place

Classification (DDC)
330 Economics

Original object

Free keywords

Standardized keywords (GND)

Sustainable Development Goals

BibTeX

@techreport{Riedel2011, url = {https://hohpublica.uni-hohenheim.de/handle/123456789/5420}, author = {Riedel, Nadine and Dharmapala, Dhammika}, title = {Earnings shocks and tax-motivated income-shifting : evidence from European multinationals}, year = {2011}, school = {Universität Hohenheim}, series = {FZID discussion papers}, }
Share this publication