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The Indirect Side of Direct InvestmentMultinational Company Finance and Taxation$
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Jack M. Mintz and Alfons J. Weichenrieder

Print publication date: 2010

Print ISBN-13: 9780262014496

Published to MIT Press Scholarship Online: August 2013

DOI: 10.7551/mitpress/9780262014496.001.0001

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The Financial Structure of German Outbound FDI

The Financial Structure of German Outbound FDI

(p.111) 5 The Financial Structure of German Outbound FDI
The Indirect Side of Direct Investment

Jack M. Mintz

Alfons J. Weichenrieder

The MIT Press

This chapter analyzes the effect of company taxes on complex multinational financial decisions, using firms selected from the database of the Deutsche Bundesbank (MiDi). It shows that the debt-to-asset ratios of German outbound investment significantly depend on the host country tax rates. Intracompany loans react in a slight elastic way to tax rate changes, while third-party debt appears less flexible.

Keywords:   foreign direct investment, financial structure, taxation, company taxes, Deutsche Bundesbank, debt-to-asset ratios, host country, tax rates

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