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

dc.contributor.authorRiedel, Nadinede
dc.contributor.authorDharmapala, Dhammikade
dc.date.accessioned2024-04-08T08:44:50Z
dc.date.available2024-04-08T08:44:50Z
dc.date.created2011-01-25
dc.date.issued2011
dc.description.abstractThis 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.en
dc.identifier.swb336568576
dc.identifier.urihttps://hohpublica.uni-hohenheim.de/handle/123456789/5420
dc.identifier.urnurn:nbn:de:bsz:100-opus-5387
dc.language.isoeng
dc.relation.ispartofseriesFZID discussion papers; 24
dc.rights.licensepubl-ohne-poden
dc.rights.licensepubl-ohne-podde
dc.rights.urihttp://opus.uni-hohenheim.de/doku/lic_ubh.php
dc.subject.ddc330
dc.subject.gndEinkommende
dc.subject.gndEinkommensdisparitätde
dc.titleEarnings shocks and tax-motivated income-shifting : evidence from European multinationalsde
dc.type.dcmiTextde
dc.type.diniWorkingPaperde
local.accessuneingeschränkter Zugriffen
local.accessuneingeschränkter Zugriffde
local.bibliographicCitation.publisherPlaceUniversität Hohenheimde
local.export.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}, }
local.export.bibtexAuthorRiedel, Nadine and Dharmapala, Dhammika
local.export.bibtexKeyRiedel2011
local.export.bibtexType@techreport
local.faculty.number3de
local.faculty.number7de
local.institute.number520de
local.institute.number795de
local.opus.number538
local.series.issueNumber24
local.series.titleFZID discussion papers
local.universityUniversität Hohenheimde
local.university.facultyFaculty of Business, Economics and Social Sciencesen
local.university.facultyFakultät Wirtschafts- und Sozialwissenschaftende
local.university.facultyLandesanstaltende
local.university.instituteInstitute for Economicsen
local.university.instituteInstitut für Volkswirtschaftslehrede
local.university.instituteForschungszentrum Innovation und Dienstleistungde

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