|Dischinger, Matthias; Riedel, Nadine (28. August 2009): There's No Place Like Home: The Profitability Gap between Headquarters and their Foreign Subsidiaries. Münchener Wirtschaftswissenschaftliche Beiträge (VWL) 2009-13|
Using a large panel data set for European firms, this paper provides evidence that operations at multinational headquarters are significantly more profitable than perations at their foreign subsidiaries. The effect turns out to be robust and quantitatively large. Our findings suggest that the profitability gap is partly driven by agency costs which arise if value-driving functions are managed by a subsidiary that is geographically separated from the headquarters management. In line with falling communication and travel costs over the last decade, the profitability gap is shown to decline over time. Apart from that, our results indicate that a higher competitiveness of multinational firms in their home markets also contributes to the profitability gap. We discuss various implications of our findings.
|Dokumententyp:||Paper (Discussion Paper)|
|Keywords:||profitability distribution, multinational enterprise, corporate taxes|
Volkswirtschaft > Munich Discussion Papers in Economics
Volkswirtschaft > Munich Discussion Papers in Economics > Mikroökonomik
Volkswirtschaft > Munich Discussion Papers in Economics > Industrieökonomik
Volkswirtschaft > Munich Discussion Papers in Economics > Informationsökonomik
Volkswirtschaft > Munich Discussion Papers in Economics > Finanzwissenschaft
Volkswirtschaft > Lehrstühle > Seminar für Wirtschaftspolitik
|Themengebiete:||300 Sozialwissenschaften > 330 Wirtschaft|
|JEL Classification:||L25, D82, F23, H25|
|Veröffentlicht am:||29. Aug. 2009 06:33|
|Letzte Änderungen:||02. Mai 2016 07:03|
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