Tax Status and Tax Response Heterogeneity of Multinationals' Debt Finance

Büttner T, Overesch M, Wamser G (2011)


Publication Type: Journal article

Publication year: 2011

Journal

Publisher: Mohr Siebeck

Pages Range: 103-122

Journal Issue: 67

URI: https://www.finanzwissenschaft.rw.fau.de/files/2020/02/Tax_Status.pdf

DOI: 10.1628/001522111X588781

Abstract

This paper analyzes how corporate taxation affects the capital structure of subsidiaries of multinational companies. The emphasis is on firm characteristics that proxy for the tax status of a subsidiary, which is crucial for the tax responsiveness of firms. Based on a comprehensive panel of German multinationals, we find that the tax sensitivity of the capital structure is significantly affected by several firm characteristics. Our results imply that well-known non-debt tax shields such as depreciation allowances and loss carryforwards reduce the tax sensitivity of the debt-to-capital ratio. We also find that a higher probability of experiencing losses reduces the tax-rate sensitivity of debt financing. © 2011 Mohr Siebeck.

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APA:

Büttner, T., Overesch, M., & Wamser, G. (2011). Tax Status and Tax Response Heterogeneity of Multinationals' Debt Finance. Finanzarchiv, 67, 103-122. https://dx.doi.org/10.1628/001522111X588781

MLA:

Büttner, Thiess, Michael Overesch, and Georg Wamser. "Tax Status and Tax Response Heterogeneity of Multinationals' Debt Finance." Finanzarchiv 67 (2011): 103-122.

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