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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

Chapter:
(p.111) 5 The Financial Structure of German Outbound FDI
Source:
The Indirect Side of Direct Investment
Author(s):

Jack M. Mintz

Alfons J. Weichenrieder

Publisher:
The MIT Press
DOI:10.7551/mitpress/9780262014496.003.0005

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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