The Impact of Thin-Capitalization Rules on Multinationals' Financing and Investment Decisions
By Thiess Buettner, Michael Overesch, U. Schreiber, G. Wamser. Social Science Research Network, 2006
143 citations recorded by the source corpus.
This paper analyzes the role of Thin-Capitalization rules for capital structure choice and investment decisions of multinationals. A theoretical analysis shows that the imposition of such rules tends to affect not only the leverage and the level of investment but also their tax-sensitivity. An empirical investigation of leverage and investment reported for affiliates of German multinationals in 24 countries in the period between 1996 and 2004 offers some support for the theoretical predictions. While Thin-Capitalization rules are found to be effective in restricting debt finance, investment is found to be more sensitive to taxes if debt finance is restricted.
Subfields: Accounting, Strategy and Management
View Paper: https://www.semanticscholar.org/paper/ac57f2f7c1c9fcdabe5e039e9f88b83ba3a3f274
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In Accounting
- Michael Overesch
- Ruud A. De Mooij
- M. Runkel
- G. Wamser
- Andreas Haufler
- Jost H. Heckemeyer
- Nadine Riedel
- Dhammika Dharmapala
In Strategy and Management
Citations in the corpus
- Tax Biases to Debt Finance: Assessing the Problem, Finding Solutions (2011, background): “Yet, they seem to have also reduced investment (Buettner et al., 2006).”
- Corporate tax planning and thin-capitalization rules: evidence from a quasi-experiment (2010, background): “We expect a negative effect of a higher turnover when external and internal debt serve as substitutes (Buettner et al., 2006a).”
- Firms' Financial Choices and Thin Capitalization Rules under Corporate Tax Competition (2012, background): “Related evidence is reported in Buettner et al. (2009).”