Scandinavian Working Papers in Economics
Discussion Papers,
Norwegian School of Economics, Department of Business and Management Science
No 2007/11: Taxes and Decision Rights in Multinationals
Søren Bo Nielsen (), Pascalis Raimondos-Møller () and Guttorm Schjelderup ()
Additional contact information
Søren Bo Nielsen: Department of Economics, Copenhagen Business School, Postal: Copenhagen Business School, Department of Economics, Porcelænshaven 16A, 1.fl., 1.85, 2000 Frederiksberg, Denmark
Pascalis Raimondos-Møller: Department of Economics, Copenhagen Business School, Postal: Copenhagen Business School, Department of Economics, Porcelænshaven 16A, 1.fl., 1.85, 2000 Frederiksberg, Denmark
Guttorm Schjelderup: Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Finance and Management Science, Helleveien 30, N-5045 Bergen, Norway
Abstract: We examine how a multinational’s choice to centralize or de-centralize its decision structure is affected by country tax differentials. Within a simple model that emphasizes the multiple conflicting roles of transfer prices in MNEs — here, as a strategic pre-commitment device and a tax manipulation instrument —, we show that decentralization is preferred in case of small tax differentials, whereas centralization can be more profitable, when tax differentials are large. In essence, the organizational flexibility of MNEs is triggered by the scope for tax minimization. Our analysis allows for both commitment and non-commitment to transfer prices, and for alternative modes of competition.
Keywords: Centralized vs. de-centralized decisions; taxes; transfer prices; MNEs
20 pages, March 27, 2007
Full text files
163886
- Norwegian School of Economics, Department of Business and Management Science
- Ordering Working Papers
- Home page for this series
Questions (including download problems) about the papers in this series should be directed to Stein Fossen ()
Report other problems with accessing this service to Sune Karlsson ().
RePEc:hhs:nhhfms:2007_011This page generated on 2024-09-13 22:16:22.