The Capital Structure of Multinational Companies Under Tax Competition

41 Pages Posted: 1 Jun 2006

See all articles by Paolo M. Panteghini

Paolo M. Panteghini

Department of Economics and Management; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Date Written: May 2006

Abstract

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

Panteghini, Paolo M., The Capital Structure of Multinational Companies Under Tax Competition (May 2006). CESifo Working Paper Series No. 1721, Available at SSRN: https://ssrn.com/abstract=905753

Paolo M. Panteghini (Contact Author)

Department of Economics and Management ( email )

Contrada Santa Chiara 50
BRESCIA, BS 25122
Italy

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.cesifo.de

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