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

Riedel, Nadine; Dharmapala, Dhammika

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

dc.contributor.author	Riedel, Nadine	de
dc.contributor.author	Dharmapala, Dhammika	de
dc.date.accessioned	2024-04-08T08:44:50Z
dc.date.available	2024-04-08T08:44:50Z
dc.date.created	2011-01-25
dc.date.issued	2011
dc.description.abstract	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.	en
dc.identifier.swb	336568576
dc.identifier.uri	https://hohpublica.uni-hohenheim.de/handle/123456789/5420
dc.identifier.urn	urn:nbn:de:bsz:100-opus-5387
dc.language.iso	eng
dc.relation.ispartofseries	FZID discussion papers; 24
dc.rights.license	publ-ohne-pod	en
dc.rights.license	publ-ohne-pod	de
dc.rights.uri	http://opus.uni-hohenheim.de/doku/lic_ubh.php
dc.subject.ddc	330
dc.subject.gnd	Einkommen	de
dc.subject.gnd	Einkommensdisparität	de
dc.title	Earnings shocks and tax-motivated income-shifting : evidence from European multinationals	de
dc.type.dcmi	Text	de
dc.type.dini	WorkingPaper	de
local.access	uneingeschränkter Zugriff	en
local.access	uneingeschränkter Zugriff	de
local.bibliographicCitation.publisherPlace	Universität Hohenheim	de
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.bibtexAuthor	Riedel, Nadine and Dharmapala, Dhammika
local.export.bibtexKey	Riedel2011
local.export.bibtexType	@techreport
local.faculty.number	3	de
local.faculty.number	7	de
local.institute.number	520	de
local.institute.number	795	de
local.opus.number	538
local.series.issueNumber	24
local.series.title	FZID discussion papers
local.university	Universität Hohenheim	de
local.university.faculty	Faculty of Business, Economics and Social Sciences	en
local.university.faculty	Fakultät Wirtschafts- und Sozialwissenschaften	de
local.university.faculty	Landesanstalten	de
local.university.institute	Institute for Economics	en
local.university.institute	Institut für Volkswirtschaftslehre	de
local.university.institute	Forschungszentrum Innovation und Dienstleistung	de

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