Scandinavian Working Papers in Economics

Discussion Papers,
Norwegian School of Economics, Department of Business and Management Science

No 2008/19: Multinationals, Minority Ownership and Tax-Efficient Financing Structures

Dirk Schindler () and Guttorm Schjelderup ()
Additional contact information
Dirk Schindler: University of Konstanz, Postal: University of Konstanz, Fach D133, 78457 Konstanz, Germany
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 model how multinationals structure their borrowing and lending transactions and find that affiliates in high-tax countries have higher internal and overall debt ratios and lower rental rates of physical capital than comparable domestic firms. We also show that affiliates with minority owners have less debt than wholly owned affiliates.

Keywords: Multinational enterprises; tax-efficient financing structures; minority ownership

JEL-codes: F23; H25

22 pages, October 17, 2008

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