|Dischinger, Matthias and Riedel, Nadine (2010): The Role of Headquarters Firms in Multinational Profit Shifting Strategies. Discussion Papers in Economics 2010-12|
This paper stresses the special role of multinational headquarters in corporate profit shifting strategies. Using a large panel of European firms, we show that multinational enterprises (MNEs) are reluctant to shift profits away from their headquarters even if these are located in high-tax countries. Thus, shifting activities in response to corporate tax rate differentials between parents and subsidiaries are found to be significantly larger if the parent observes a lower corporate tax rate than its subsidiary and profit is thus shifted towards the headquarters firm. This result is in line with recent empirical evidence suggesting that MNEs bias the location of profits and highly profitable assets in favor of the headquarters location (for agency cost reasons among others).
|Item Type:||Paper (Discussion Paper)|
|Keywords:||multinational firm, profit shifting, headquarters location|
Economics > Discussion Papers in Economics
Economics > Discussion Papers in Economics > Economic Policy
Economics > Discussion Papers in Economics > Public Finance
|Subjects:||300 Social sciences > 330 Economics|
|JEL Classification:||H25, H26, C33|
|Deposited On:||03. Feb 2010 14:50|
|Last Modified:||25. May 2012 11:16|
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