Thin Capitalization Rules and Multinational Firm Capital Structure

Released on by Jennifer Blouin
preview-18

  • Thin Capitalization Rules and Multinational Firm Capital Structure Book Detail

  • Author : Jennifer Blouin
  • Release Date : 2014-01-24
  • Publisher : International Monetary Fund
  • Genre : Business & Economics
  • Pages : 37
  • ISBN 13 : 1484384644
  • File Size : 80,80 MB
DOWNLOAD BOOK

Thin Capitalization Rules and Multinational Firm Capital Structure by Jennifer Blouin PDF Summary

Book Description: This paper examines the impact of thin capitalization rules that limit the tax deductibility of interest on the capital structure of the foreign affiliates of US multinationals. We construct a new data set on thin capitalization rules in 54 countries for the period 1982-2004. Using confidential data on the internal and total leverage of foreign affiliates of US multinationals, we find that thin capitalization rules significantly affect multinational firm capital structure. Specifically, restrictions on an affiliate’s debt-to-assets ratio reduce this ratio on average by 1.9%, while restrictions on an affiliate’s borrowing from the parent-to-equity ratio reduce this ratio by 6.3%. Also, restrictions on borrowing from the parent reduce the affiliate’s debt-to-assets ratio by 0.8%, which shows that rules targeting internal leverage have an indirect effect on the overall indebtedness of affiliate firms. The impact of capitalization rules on affiliate leverage is higher if their application is automatic rather than discretionary. Furthermore, thin capitalization regimes have aggregate firm effects: they reduce the firm’s aggregate interest expense but lower firm valuation. Overall, our results show than thin capitalization rules, which thus far have been understudied, have a substantial effect on the capital structure within multinational firms, with implications for the firm’s market valuation.

Disclaimer: www.yourbookbest.com does not own Thin Capitalization Rules and Multinational Firm Capital Structure books pdf, neither created or scanned. We just provide the link that is already available on the internet, public domain and in Google Drive. If any way it violates the law or has any issues, then kindly mail us via contact us page to request the removal of the link.

Tax Policy and The Economy

Tax Policy and The Economy

File Size : 52,52 MB
Total View : 9205 Views
DOWNLOAD

This series presents recent research on the effects of taxation and government expenditure programs on economic performance and analyses of the effects of poten

Multilateral Cooperation in Tax Law

Multilateral Cooperation in Tax Law

File Size : 89,89 MB
Total View : 8853 Views
DOWNLOAD

An in-depth analysis of various aspects of multilateral cooperation in tax law Tax evasion and aggressive tax planning causing base erosion and profit shifting

Counterrevolution

Counterrevolution

File Size : 52,52 MB
Total View : 6750 Views
DOWNLOAD

A thorough investigation of the current combination of austerity and extravagance that characterizes government spending and central bank monetary policy At the

Taxing Profit in a Global Economy

Taxing Profit in a Global Economy

File Size : 38,38 MB
Total View : 3459 Views
DOWNLOAD

The international tax system is in dire need of reform. It allows multinational companies to shift profits to low tax jurisdictions and thus reduce their global