Corporate taxation, debt financing and foreign-plant ownership

TLDR: In this article, the authors compare domestically and foreign-owned plants with respect to their debt-to-assets ratio and analyzes to which extent the difference is systematically affected by corporate taxation.

About: This article is published in European Economic Review.The article was published on 2010-01-01 and is currently open access. It has received 119 citations till now. The article focuses on the topics: Debt ratio & Internal debt.

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Table 2 Descriptive statistics.

Table 8 Sensitivity analysis II—average treatment effect at alternative moments of the age and tax rate distributions

Table 3 Selection equation (probability that a plant has a foreign multinational firm as the ultimate owner).

Table 7 Sensitivity analysis

Table 4 Balancing property of the observables included in the selection models.

Table 5 Average effect of foreign multinational plant ownership on debt policy.a

Frequently asked questions

Q1. What have the authors contributed in "Corporate taxation, debt financing and foreign-plant ownership" ?

This paper compares domestically and foreign-owned plants with respect to their debtto-assets ratio and analyzes to which extent the difference is systematically affected by corporate taxation. Using data from 32,067 European firms, the authors find that foreign-owned firms on average exhibit a significantly higher debt ratio than their domestically owned counterparts in the host country. 

Q2. What have the authors stated for future works in "Corporate taxation, debt financing and foreign-plant ownership" ?

Empirically, the authors apply propensity score matching methods to account for the fact that the plant operation mode is endogenous. Third, the authors estimate a positive interaction effect between the plant operation mode and the corporate tax rate.