{
  "title": "Capital Structure and International Debt Shifting",
  "publication": "IMF Working Papers, February 1, 2007",
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  "summary": "This paper presents a model of a multinational firm's optimal debt policy that incorporates international taxation factors.",
  "sections": [
    {
      "heading": "Research question and model",
      "content": "- Presents a model of a multinational firm's optimal debt policy that incorporates international taxation factors.\n- Key model prediction:\n  - A multinational firm's indebtedness in a country depends on a weighted average of national tax rates and differences between national and foreign tax rates.\n  - Differences between national and foreign tax rates matter because multinationals have an incentive to shift debt to high-tax countries."
    },
    {
      "heading": "Data and empirical approach",
      "content": "- Empirical testing using:\n  - A novel firm-level dataset for European multinationals and their subsidiaries.\n  - Newly collected data on the international tax treatment of dividend and interest streams."
    },
    {
      "heading": "Principal empirical findings",
      "content": "- Corporate debt policy reflects:\n  - Domestic corporate tax rates.\n  - Differences in international tax systems (i.e., national versus foreign tax treatment).\n- Empirical results are consistent with the model’s prediction that multinationals shift debt across countries in response to tax differentials."
    },
    {
      "heading": "Key subjects and keywords",
      "content": "- Subject: Credit, Marginal effective tax rate, Tax incentives, Transnational corporations, Withholding tax\n- Keywords: capital structure, multinational firm, WP"
    },
    {
      "heading": "Contribution and implications",
      "content": "- Findings contribute to understanding how corporate debt policy is set in an international context by demonstrating that both domestic tax rates and international tax-system differences influence multinational firms’ indebtedness patterns.\n\nSource: Capital Structure and International Debt Shifting, IMF Working Papers 2007/039 (February 1, 2007).\n\n---\n\n Content in this bundle\n\n- wp0739\n  - wp0739 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp0739 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/capital-structure-and-international-debt-shifting-20074"
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    "Authors: Luc Laeven, Harry Huizinga, Gaetan Nicodeme",
    "Published: February 1, 2007",
    "Series: IMF Working Papers",
    "Presents a model of a multinational firm's optimal debt policy that incorporates international taxation factors.",
    "Key model prediction:",
    "Empirical testing using:",
    "Corporate debt policy reflects:",
    "Empirical results are consistent with the model’s prediction that multinationals shift debt across countries in response to tax differentials.",
    "Subject: Credit, Marginal effective tax rate, Tax incentives, Transnational corporations, Withholding tax",
    "Keywords: capital structure, multinational firm, WP",
    "Findings contribute to understanding how corporate debt policy is set in an international context by demonstrating that both domestic tax rates and international tax-system differences influence multinational firms’ indebtedness patterns.",
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