The Capital Structure of Multinational Companies Under Tax Competition
41 Pages Posted: 1 Jun 2006
Date Written: May 2006
This article studies the relationship between debt policies of multinational companies (MNCs) and governments' tax strategies. In the first part, it is shown that the ability to shift income from high- to low-tax countries affects MNCs' financial choices. In the second part we show how MNCs' financial decisions can affect the tax strategies of two governments competing to attract income.
Keywords: capital structure, country risk, default, multinationals, tax competition
JEL Classification: G31, H25, H32
Suggested Citation: Suggested Citation