Internal Ownership Structures of U.S. Multinational Firms

49 Pages Posted: 5 Jun 2013

See all articles by Katharina Lewellen

Katharina Lewellen

Dartmouth College - Tuck School of Business

Leslie A. Robinson

Dartmouth College - Tuck School of Business; Dartmouth College - Accounting

Date Written: April 30, 2013

Abstract

This paper is a comprehensive analysis of the foreign ownership structures of U.S. multinational firms. Though the vast majority of foreign subsidiaries are ultimately wholly-owned by their U.S. parents, the way these entities are arranged within the firms’ ownership structures varies considerably from simple to highly complex. The structures receive public attention because of their role in tax planning, but no academic study to date investigates the trade-offs involved in designing them jointly, or documents what the structures look like for typical firms. This paper begins to fill this gap. After establishing a basic taxonomy and a set of key facts about the structures, we look inside the black box of complex firms to investigate what forces drive internal ownership choices. We find evidence of several distinct tax motives, but also uncover a number of non-tax factors, including internal financing costs and expropriation risks.

Keywords: Multinationals, Ownership Structures, Taxes

JEL Classification: G32, H25

Suggested Citation

Lewellen, Katharina and Robinson, Leslie, Internal Ownership Structures of U.S. Multinational Firms (April 30, 2013). Available at SSRN: https://ssrn.com/abstract=2273553 or http://dx.doi.org/10.2139/ssrn.2273553

Katharina Lewellen (Contact Author)

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States

Leslie Robinson

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States

Dartmouth College - Accounting ( email )

100 Tuck Hall
Hanover, NH 03755
United States
603-646-4018 (Phone)

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