tax havens and disclosure aggregation multinational firms have been accused by politicians regulators and citizen groups of shifting profits to low tax geographic areas we present evidence that multinational firms with tax haven operations tend to aggregate their geographic disclosures to a greater extent the results are consistent with managers attempting to avoid criticism by reducing the transparency of their tax avoidance activities we find these results to be stronger for larger firms with higher political costs and for firms in natural resources industries in retail industries or with low competition the evidence is relevant to policymakers and others interested in multinational firms financial reporting and tax activities

international taxation and the direction and volume of cross border m as we show that the parent subsidiary structure of multinational firms created by cross border mergers and acquisitions is affected by the prospect of international double taxation specifically the likelihood of parent firm location in a country following a cross border takeover is reduced by high international double taxation of foreign source income at the same time countries with high international double taxation attract smaller numbers of parent firms a unilateral elimination of worldwide taxation by the united states is simulated to increase the proportion of parent firms locating in the united states following cross border mergers and acquisitions from 53 to 58

water and energy price impacts on residential water demand in copenhagen while water price effects on residential water demand have been studied for several decades the impact of energy prices does not seem to have received much attention in this paper a residential water demand function derived from a model of household production of final consumption goods taking water energy and an aggregate of other goods as inputs is estimated on pooled time series data we find negative energy cross price elasticities around 0 2 and water price elasticities in the order of 0 1 or smaller

national cultural distance and cross border acquisition performance previous theoretical research has argued that national cultural distance hinders cross border acquisition performance by increasing the costs of integration this article tests the alternative hypothesis that national cultural distance enhances cross border acquisition performance by providing access to the target s and or the acquirer s diverse set of routines and repertoires embedded in national culture using a multi dimensional measure of national cultural distance and controlling for other effects we examine a sample of 52 cross border acquisitions that took place between 1987 and 1992 and find a positive association between national cultural distance and cross border acquisition performance

tax motivated transfer pricing and us intrafirm trade prices abstract this paper analyzes monthly data on us international trade prices between 1997 and 1999 in order to investigate the impact of tax influences on intrafirm trade prices results indicate that there is substantial evidence of tax motivated transfer pricing in us intrafirm trade prices there is a strong and statistically significant relationship between countries tax rates and the prices of intrafirm transactions controlling for other variables that affect trade prices as country tax rates are lower us intrafirm export prices are lower and us intrafirm import prices are higher this finding is consistent with theoretical predictions regarding tax motivated income shifting behavior

fiscal paradise foreign tax havens and american business the tax haven affiliates of american corporations account for more than 20 percent of u s foreign direct investment and nearly a third of the foreign profits of u s firms american companies report extraordinarily high profit rates on their tax haven investments in 1982 this behavior implies that the revenue maximizing tax rate for a typical haven is around 5 8 percent american and foreign investment in tax havens has an uncertain effect on u s tax revenue but since low tax rates encourage american companies to shift profits out of high tax foreign countries it is possible that low foreign tax rates ultimately enhance u s tax collections

on the specification of price in studies of consumer demand under block price scheduling using a new model formulation and data from a sample of colorado utilities we investigated the price specification controversy marginal price versus average revenue when estimating residential water demand the improved statistical fit using average

price elasticity of groundwater demand attenuation and amplification bias due to incomplete information measurement errors in both human and natural components of agricultural and environmental systems can be as much a source of estimation bias as omitted variables selfselection simultaneity and reverse causality nonetheless partly because of difficulties in obtaining data there is less literature on measurement error problems than on other endogeneity problems this article examines estimation bias in the price elasticity of groundwater consumption for irrigated agriculture on the intensive margin the price at issue is for the energy used in pumping and pressurizing water for delivery lacking the precise unit irrigation cost previous studies imputed irrigation costs we first consider groundwater irrigation costs and identify factors that can cause measurement errors in the process of imputation under incomplete information about the determinants of irrigation costs we follow this by systematically analyzing the potential bias caused by measurement errors using econometric theory along with monte carlo simulations where appropriate we then quantify actual measurement errors making use of a unique dataset in which energy and groundwater consumption data are matched for individual observations finally we compare regression results using exact irrigation costs as opposed to imputed ones we find evidence of substantial measurement errors resulting in attenuation and amplification bias in the price elasticity of irrigation water consumption on the intensive margin our results indicate that measurement errors in irrigation costs can lead to misleading policy implications related to water and energy pricing as a tool to conserve water we also show that estimating the energy price elasticity of groundwater use is not as straightforward as previously thought

taxes tariffs and transfer pricing in multinational corporate decision making three interrelated aspects of u s multinational corporation activity are analyzed here the ability to shift profits from high tax countries to low tax countries the impact of host country taxes and tariffs on the distribution of real capital and the influence of these policies on international trade patterns of the united states and host countries the cross sectional empirical analysis indicates that the observed pattern of reported profits in high and low tax countries is consistent with income shifting behavior and that real investment responds to host country effective tax rates and tariffs the united states appears both to import more from and export more to low tax countries where mnc investment is greater but this bilateral focus must be amplified to consider multilateral effects if trade benefits are to be projected copyright 1991 by mit press

demand side management policies for residential water use who bears the conservation burden to assess the potential for urban demand side management dsm policies as a water resource management tool we analyze the extent to which price and alternative policy instruments such as use and quantity restrictions and subsidies for water efficient technologies reduce residential demand and their distributional implications by type of household using detailed household level panel data for two california communities the results suggest that the ultimate effects of dsm policies in terms of the reduction in aggregate demand and distribution of water savings among household classes depend both on the policy instrument selected and the composition of aggregate demand

inflation and tax evasion an empirical analysis this paper contains an analysis of the effect of inflation on aggregate tax evasion in the united states over the period 1947 81 it is found that tax evasion in both absolute and relative terms is positively related to the inflation rate further the results indicate that aggregate evasion has risen in both absolute and relative terms with increases in the marginal tax rate but has fallen with increases in the detection probability the penalty rate and the wage share of income finally evasion has risen in absolute terms but has fallen in relative terms when real true income has risen

do droughts have long term effects on water consumption evidence from the urban area of barcelona this article examines the long term effects of droughts on water consumption using data of municipalities of the urban area of barcelona two important characteristics of the sample of municipalities are the relatively low water consumption in the pre drought period and the fact that indoor uses are clearly predominant controlling for prices income and various socio demographic factors we find a reduction in water consumption not only during the drought episode but also in subsequent periods these permanent reductions in water use may be explained by household behavioural changes technological changes or structural water policy changes

responses to changes in domestic water tariff structures a latent class analysis on household level data from granada spain a problem that affects the estimation of water demand functions is the presence of unobserved individual heterogeneity which means that a common demand function is unlikely to represent the behavior of all users we implement latent class models to estimate water demand functions for four groups of users who are classified according to their unobservable preferences this more flexible approach makes it possible to distinguish four different response patterns to changes in the drivers of water use including different price elasticities these results should be of particular interest to regulators who would like to tailor water demand management policy to heterogeneous users our analysis exploits household level panel data on residential water demand and consumers characteristics obtained by combining information from a survey of 1 465 domestic users in the city of granada and bimonthly price and consumption data supplied by this city s water supplier from the period 2009 2011

measuring the impact of water supply interruptions on household welfare water scarcity frequently leads to a need for rationing the choice of an adequate rationing method should be based on the impact on consumer welfare that is produced by each rationing plan some rationing schemes such as the frequently used supply interruption method can be regarded as changes in the characteristics of the good in this case time availability that do not modify the pre set consumer budget under the standard theoretical restrictions on consumer behavior compensating or equivalent variations surpluses cannot be used to identify the impacts of these methods on household welfare in this paper we propose a set of sufficient conditions with respect to the utility function that allows for the evaluation of the compensating or equivalent variations surpluses associated with changes in goods quality even if those goods are considered to be essential for consumers we use these conditions to compare the welfare losses associated with the water supply cuts implemented in seville spain to those that would result if water was instead rationed using price changes

mars venus marriages culture and cross border m a using a sample of over 800 cross border acquisitions during 1991 2004 we find that contrary to general perception cross border acquisitions perform better in the long run if the acquirer and the target come from countries that are culturally more disparate we use mainly the hofstede measure of cultural dimensions to measure cultural distance but also examine alternative proxies the positive relationship of performance to cultural distance persists after controlling for several deal specific variables and country level fixed effects and is robust to alternative specifications of long term performance cash and friendly acquisitions tend to perform better in the long run there is also some evidence of synergies when acquirers are from stronger economies relative to the targets

related lending and banking development does related lending have positive or negative effects on the development of banking systems we analyze a unique cross country data set covering 74 countries from 1990 to 2007 and find that related lending on average does not have any effect on the growth of credit we do find however that there are conditional relationships related lending tends to retard the growth of banking systems when rule of law is weak whereas it tends to promote the growth of banking systems when rule of law is strong we also find that related lending appears to be associated with looting when banks are owned by non financial firms but that it does not do so when non financial firms are owned by banks our results indicate that whether related lending is positive or pernicious depends critically on the institutional context in which it takes place there is no single best policy regarding related lending these findings are robust to alternative specifications including iv regressions

demand specification for municipal water management evaluation of the stone geary form to specify demand in most water allocation problems researchers face a tradeoff between flexibility and parsimony flexible forms are less constraining on elasticity estimates but require large parameter sets that tend to cause poor out of sample forecasts and computational difficulties using a five year panel of texas municipalities the parsimonious stone geary form yields estimated demand functions that are comparable to flexible form results the stone geary specification also provides an estimate of the portion of water use that may not be responsive to price and is useful in analysing price structures and designing conservation policies

what goes around comes around effects of offshore outsourcing on the export performance of firms we examine the effect of offshore outsourcing on the export performance of firms building on the theories of international business the resource based view and transaction cost economics we argue that offshore outsourcing helps firms directly or indirectly to export more it may reduce their production costs and enhance their flexibility it may also provide them with new resources and market knowledge however the impact of offshore outsourcing depends on the resources and capabilities of firms to manage a network of foreign suppliers and to absorb foreign knowledge using a database of around 2000 manufacturing mnes in france in 1999 we find that offshore outsourcing increases export performance the effects being stronger in the export markets where firms import intermediate goods we also show that the firm size the organization of intra firm imports and the export experience moderate the effects of offshore outsourcing positively these findings have implications for firms and policymakers journal of international business studies 2011 42 334 344 doi 10 1057 jibs 2010 26

transfer pricing determinants of u s multinationals this paper examines the influence of environmental and firm specific variables on the selection of international transfer pricing strategies the primary data were obtained from 164 multinational enterprises by means of a questionnaire responses were analyzed by performing factor analysis and constructing a probit model the findings suggest that legal constraints and firm size are significant determinants in the selection of international transfer pricing strategies by u s multinationals

estimating residential water demand in the presence of free allowances the main aim of this paper is to quantify the impact of a rate structure which includes a free allowance on residential water consumption the analysis here differs from most previous research in that it explicitly recognizes that water consumption above the free allowance being sensitive to price responds less to social and climatic factors than consumption below the free allowance while the model specification and estimation procedures used here should be of interest to those interested in the demand for water the results using data for adelaide south australia on the determinants of water consumption should be of interest to water authorities

an empirical survey of residential water demand modelling abstract the increased reliance on demand side management policies as an urban water consumption management tool has stimulated considerable debate among economists water utility managers regulators consumer interest groups and policymakers in turn this has fostered an increasing volume of literature aimed at providing best practice estimates of price and income elasticities quantifying the impact of non price water restrictions and gauging the impact of non discretionary environmental factors affecting residential water demand this paper provides a synoptic survey of empirical residential water demand analyses conducted in the last 25 years both model specification and estimation and the outcomes of the analyses are discussed

corporate tax avoidance and firm value abstract do corporate tax avoidance activities advance shareholder interests this paper tests alternative theories of corporate tax avoidance using unexplained differences between income reported to capital markets and to tax authorities ols estimates indicate that the effect of tax avoidance on firm value is a function of firm governance as predicted by an agency perspective on corporate tax avoidance instrumental variables estimates based on exogenous changes in tax regulations yield larger overall effects and reinforce the basic result as do several robustness checks the results suggest that the simple view of corporate tax avoidance as a transfer of resources from the state to shareholders is incomplete given the agency problems characterizing shareholder manager relations

are the extent and effect of psychic distance perceptions symmetrical in cross border m as evidence from a two country study the concept of psychic distance has several entrenched assumptions that have not been put to sufficient systematic scrutiny we address this gap by investigating the assumptions of symmetry i e whether psychic distance from country a to country b is the same as that from country b to country a and discordance i e whether differences in psychic distance between two countries always lead to lack of fit of psychic distance in cross border mergers and acquisitions we propose a new framework which differentiates between the extent i e the degree to which two countries are perceived to be similar different and effects i e the degree to which distance perceptions create favorable or unfavorable attitudes and responses of psychic distance perceptions we argue that relative status positions affect extent and effects of psychic distance to test our predictions we collected data through policy capturing studies in sweden and china our findings reveal that both the extent and the effects of psychic distance perceptions are asymmetric we also found that psychic distance perceptions create unfavorable favorable attitudes among swedish chinese respondents toward chinese swedish acquirers our follow up examination confirms that relative status positions are a key driver of these results

household water demand seasonal elasticities a stone geary model under an increasing block rate structure using household level panel data from tucson arizona and a unique set of highly disaggregated control variables we estimate residential demand for water via a stone geary specification the stone geary functional form allows price elasticity of demand to vary with quantity consumed price and income and enables estimation of a threshold level of consumption below which demand is considered perfectly price inelastic an encompassing test of consumer price response reveals evidence favoring a lagged average price specification rather than one using lagged marginal price the estimated model also finds substantial seasonal variation in price elasticity and declining consumer price responsiveness

cross border relocations of headquarters in europe this paper analyzes the relocations of both corporate and regional headquarters hq in a multi country setting on the basis of a dataset of 52 cross border hq relocations in europe during 1996 2006 we document an increasing trend toward relocation push and pull factors affecting hq location choice and catalyzing factors that affect the relocation decision high taxes and a high employment rate represent push factors that we find to increase the likelihood of hq relocation in particular at the mean rate of corporate tax a one percentage point increase in tax translates into a 6 8 increase in hq relocation likelihood in contrast central location and low taxes represent pull factors that increase the attractiveness of the hq location in terms of catalyzing factors we find that export oriented companies and regional hq have a higher tendency to relocate as a whole we extend the existing research by putting forward a conceptual framework of hq relocation decisions and by providing novel empirical evidence on the hq relocation phenomenon our findings contribute to an improved understanding of the determinants of corporate hq relocation decisions and provide important tax policy considerations for public policy decision makers in individual european countries and in the european commission

lost in translation the effect of cultural values on mergers around the world we find strong evidence that three key dimensions of national culture trust hierarchy and individualism affect merger volume and synergy gains the volume of cross border mergers is lower when countries are more culturally distant in addition greater cultural distance in trust and individualism leads to lower combined announcement returns these findings are robust to year and country level fixed effects time varying country pair and deal level variables as well as instrumental variables for cultural differences based on genetic and somatic differences the results are the first large scale evidence that cultural differences have substantial impacts on multiple aspects of cross border mergers

taxing the multinational enterprise on the forced redesign of global value chains and other inefficiencies the taxation of the multinational enterprise mne has been a continuing concern for policymakers we argue that the changing nature of the mobile mne e g its improved ability to fine slice the value chain and disperse it geographically makes it increasingly important to rethink current tax policies first there should be more focus on the inefficiencies that arise when taxation leads to the inefficient location of mne activities thus mnes may shift activities to low tax jurisdictions that offer lucrative pecuniary and non pecuniary incentives but do not enable their investments to maximize their contribution to global value creation second international tax regimes should ensure that mnes pay for their consumption of local public goods and public finance scholars have long known that the taxation based distortions are minimized when the tax objects are immobile however the bulk of current tax policies are aimed at corporate profits that are both poor proxies for the consumption of local public goods as well as extremely mobile integrating theory from international business public finance and economic geography our analysis demonstrates that moving the incidence of taxation from corporate profits to dividends and consumption would unambiguously improve both wealth creation and efficiency

international capital structure equilibrium this paper develops a theory of capital structure in an international setting with corporate and personal taxes we generalize the miller analysis to an international equilibrium characterized by differential international taxation and inflation in otherwise perfect international capital markets our analysis highlights the key role that corporate tax arbitrage plays in generating an international capital structure equilibrium and we set forth a number of mechanisms for tax arbitrage transactions we close the paper by outlining some implications of our analysis for national differences in capital structure the international fisher effect and international tax effects on yield differentials among major questions regarding corporate capital structure which arise in an international setting are how or whether multiple tax jurisdictions and multiple currencies affect firm financing decisions and the international bond market equilibrium we examine some of these questions by way of generalizing miller s 1977 debt and taxes model into an international setting this setting allows for different tax regimes across countries as well as the possibility of differential inflation across currencies with consequent exchange rate movements in the first part of this paper we find that an international miller type equilibrium obtains under differential international taxation with capital market conditions which are otherwise analogous to those required for a domestic miller equilibrium our analysis particularly highlights the role that corporations play in miller s analysis as vehicles for tax arbitrage we show that if corporations engage in international tax arbitrage transactions on an equal footing no optimal capital structure exists for individual firms consequently without further restrictions differences in international tax rates alone are incapable of dictating a particular capital structure for an individual firm in the second part of the paper we extend the analysis to consider differential inflation rates with a consequent exchange rate movement and draw additional implications for the international analog of the miller equilibrium with differential inflation and taxation we begin by showing the existence of the international fisher effect for both equity and bonds although inflation and or exchange rate movements may affect real corporate tax subsidy rates and real

on income tax avoidance the case of germany abstract we present a micro estimate determining taxed income as a function of gross income and all major deduction options depending on household and asset categories it shows that tax savings strongly increase with increasing income resulting in an effective marginal tax rate 16 percentage points below the legislated one for the highest income groups this calls into question the intended distributional impact of progressive income taxation our estimate suggests aggregate income tax losses to the german fiscal authorities in the order of magnitude of 34 of wage and income taxes paid in 1983 relative to 1994 tax proceeds this percentage would amount to dm 105 b

cross border takeovers corruption and related aspects of governance we use a panel of 4979 cross border and domestic takeovers to test the relation between host country corruption and premiums paid for local targets host country corruption is negatively associated with target premiums after correcting for other governance related factors such as political stability legal systems and financial disclosure standards we estimate that deterioration in the corruption index by one point on a 10 point scale is on average associated with a reduction of 21 of local targets premiums our results do not support the notion that local corruption constitutes a significant market barrier to foreign investors rather it represents a discount on local takeover synergies which affects foreign and domestic acquirers alike however we find that the major effects of corruption can alternatively be explained by government effectiveness pointing towards an endogenous relationship between bribery and bureaucracy

state ownership effect on firms fdi ownership decisions under institutional pressure a study of chinese outward investing firms this study investigates the effect of state ownership on chinese firms foreign direct investment fdi ownership decisions it adopts a political perspective to extend the application of institutional theory in international business research specifically it examines firms heterogeneous responses to external institutional processes during foreign market entry while taking into consideration the political affiliation of firms with the external institutions we argue that state ownership creates the political affiliation of a firm with its home country government which increases the firm s resource dependence on home country institutions while at the same time influencing its image as perceived by host country institutional constituents such resource dependence and political perception increase firms tendency to conform to rather than resist isomorphic institutional pressures we tested our hypotheses using primary data for 132 fdi entries made by chinese firms during 2000 2006 and we found that the effects of home regulatory host regulatory and host normative pressures on a firm to choose a joint ownership structure were stronger when the share of equity held by state entities in the firm was high

why pay more corporate tax avoidance through transfer pricing in oecd countries this paper presents suggestive evidence of income shifting in response to differences in corporate tax rates for a large selection of oecd countries we use a new method to disentangle the income shifting effects from the effects of tax rates on real activity our baseline estimates suggest that a substantial share of the revenues from a unilateral increase in the corporate tax rate is lost because of a decline in reported income

distributing water s bounty following an investigation of theoretical issues and an inventory of modeling requirements support for increasing block rates is examined empirically through comparison to a uniform rate that includes scarce water value using a single year monthly simulation model it is found that under conditions of scarcity households using smaller amounts of water are better off with a uniform rate than an increasing block large water users have opposing preferences similar results arise for those household characteristics which are correlated with water use such as income property value number of residents and outdoor area of the property for example low income households prefer scarcity inclusive uniform rates over increasing block rates when scarcity is present therefore in contrast to popularized opinion increasing block rates do not place the welfare burden of conservation on large water users nor do such rates favor low income people in scarce water circumstances

determinants of residential water demand in germany abstract we econometrically analyze the impact of several economic environmental and social determinants for the per capita demand for water in about 600 water supply areas in germany besides prices income and household size we consider the effects of population age the share of wells housing patterns precipitation and temperature we also explore why current per capita residential water consumption in the new federal states is about 30 lower than in the old federal states since average cost pricing may cause an endogeneity problem we apply instrumental variable procedures in addition to single equation ordinary least squares but find no evidence that prices are endogenous our estimation results suggest that the price elasticity of water demand in germany is around 0 24 the income elasticity is positive decreases with higher income levels and is at least three times higher in the new federal states than in the old federal states current differences in prices and income levels explain about one third of the gap in residential water use between the two regions household size and the share of wells have a negative impact on per capita water demand and water use increases with age finally the findings provide some evidence that rainfall patterns rather than total rainfall affect water consumption while temperature appears to have no impact at all all outcomes are robust to a log log and two types of semi log specifications for the water demand function

cross border acquisition abandonment and completion the effect of institutional differences and organizational learning in the international business service industry 1981 2001 based on the concepts of north s 1990 political economy of national institutions and economic behavior we investigate how formal and informal institutional features influence the likelihood that a cross border acquisition deal will be completed as well as the time taken for its completion after announcement additionally we study how past experience with completed acquisition deals moderates the effects of institutional differences we focus on a relatively new context the pre completion stage of acquisition processes we test our hypotheses using data from 2389 announced cross border acquisition deals in the international business service industry 1981 2001 we find that differences in national formal and informal institutions explain part of the variation in the likelihood that an announced cross border acquisition deal will be completed as well as the duration of the deal making in addition organizational learning moderates the effects of institutional distance past experience with completed cross border acquisition deals increases the likelihood of a subsequent deal completion in institutionally closer environments but shortens the deal duration in institutionally distant environments

tax evasion and capital gains taxation this paper uses time series data to investigate how changes in capital gains tax rates affect taxpayer compliance it finds that a one percent increase in the marginal tax rate reduces voluntary compliance by between one half and one percent these results confirm the findings of previous studies based on individual household data they also suggest that at least one quarter of the observed capital gain realization response to changes in marginal tax rates is due to changes in reporting behavior rather than portfolio behavior this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item

portable country governance and cross border acquisitions the agency theory and law and finance literatures show good country governance encourages financial development mitigates agency problems and increases firm value drawing on these literatures we develop a theory that benefits from good country governance are portable by firms across countries through cross border acquisitions using acquisitions from 56 countries from 1990 to 2007 we find that acquirers can transport the benefits from good country governance so that they gain more from acquiring targets with worse country governance than their own as predicted the acquirer s stock price reaction to acquisitions increases with the country governance distance between the acquirer and the target

altered states taxes and the location of foreign direct investment in america this paper compares the distribution between u s states of investment from countries that grant foreign tax credits with investment from all other countries the ability to apply foreign tax credits against home country tax liabilities reduces an investor s incentive to avoid high tax foreign locations state corporate tax rate differences of 1 percent are associated with differences of 9 11 percent between the investment shares of foreign tax credit investors and the investment shares of all others suggesting that state taxes significantly influence the pattern of foreign direct investment in the united states copyright 1996 by american economic association

the effect of taxes and depreciation on corporate investment and financial leverage this paper provides an analysis of the effect of corporate and personal taxes on the firm s optimal investment and financing decisions under uncertainty it extends the deangelo aad masulis capital structure model by endogenizing the firm s investment decision the authors results indicate that when investment is allowed to adjust optimally the existing predictions about the relationship between investment related and debt related tax shields must be modified in particular the authors show that increases in investment related tax shields due to changes in the corporate tax code are not necessarily associated with reductions in leverage at the individual firm level in cross sectional analysis firms with higher investment related tax shields normalized by expected earnings need not have lower debt related tax shields normalized by expected earnings unless all firms utilize the same production technology differences in production technologies across firms may thus explain why the empirical results of recent cross sectional studies have not conformed to the predictions of deangelo and masulis

labor market regulations and cross border mergers and acquisitions this article exploits changes in country level employment protection regulations as a source of plausibly exogenous variation in labor laws and finds that these regulations play an important role in cross border merger activity over the 1991 2009 period countries that tighten employment regulations attract more foreign acquirers especially those from countries with relatively more flexible labor regulations the results appear to be robust to alternative specifications importantly these patterns are pronounced in those recipient country sectors in which foreign acquirers may find attractive targets at bargain prices sectors with relatively high productivity and skill the article also provides evidence suggesting that because pro labor reforms allow foreign acquirers to cherry pick more skilled and productive local firms these transactions are associated with greater deal synergies and improved post merger operating performance

failure to complete cross border m as to vs from emerging markets while cross border mergers and acquisitions m as involving emerging markets have been increasing in recent years a high percentage collapse before completion this study investigates how the predictors of cross border m a completion involving emerging markets depend upon the direction of global expansion i e investment inbound to a developing market or outbound from a developing market analysis based on 15 years of data from four emerging economies brazil russia india and china from 1995 to 2010 reveals fundamental differences in the predictors of inbound vs outbound m a completion country level factors reflecting differences in political trade and legal environments strongly affect the completion for inbound m as but have a much weaker influence on outbound m as by contrast firm level factors such as past m a experience have a significantly stronger effect on completion for outbound than for inbound m as most interestingly two deal level factors the percentage of stake sought by the acquirer and whether or not the deal is a cash transaction increase the likelihood of completion for inbound but decrease it for outbound m as these findings have important managerial implications for enhancing the success of global expansions

residential water demand responds asymmetrically to rising and falling prices this paper econometrically estimates residential water consumption in germany between 2007 and 2013 based on a panel of almost 3000 supply areas in particular the analysis distinguishes periods o

escape from the usa government debt to gdp ratio country tax competitiveness and us oecd cross border m as statutory tax rates of a country do not reflect a country s true tax competitiveness we propose and show that government debt to gdp ratio govdebt of a country is a better proxy for its tax competitiveness using a comprehensive sample of 1 884 completed cross border acquisition transactions from the u s to other oecd countries we document that the u s target country govdebt difference is significantly and positively related to both deal announcement return and post deal tax saving of the acquirer the govdebt difference is also significantly and positively related to u s target country deal flow the findings remain robust when we control for the potential endogeneity of govdebt difference our findings strongly suggest that tax avoidance is an important driver of u s oecd cross border deal flow and it increases shareholder wealth for u s acquirers

the underpricing of private targets abstract we examine acquisitions of private firms with valuation histories and find a positive relation between acquirer announcement returns and target valuation revisions similar to other studies acquirer announcement returns are positive on average however positive acquirer announcement returns are mainly driven by targets that are acquired for more than their prior valuation this relation is consistent with pricing effects associated with target valuation uncertainty and behavioral biases in negotiation outcomes

sequencing the expansion of geographic scope and foreign operations by born global firms born global firms are not actually born global but rather internationalize rapidly from their inception by expanding their geographic scope and extent of foreign operations however it remains unclear whether such firms 1 simultaneously expand along both dimensions 2 focus on expanding along a single dimension at a given time and switch interchangeably between expanding geographic scope and extent of foreign operations in subsequent periods or 3 stick solely to a specific internationalization path over several subsequent periods this study theorizes and empirically demonstrates that born global firms stick to a dominant internationalization path over subsequent periods arguably this phenomenon reflects managerial efforts to reduce the perceived risk of internationalization and their preference to develop and leverage capabilities that are specific to either of the internationalization paths until the economies of further expanding this path are exhausted

nonparametric estimation of exact consumers surplus and deadweight loss we apply nonparametric regression models to estimation of demand curves of the type most often used in applied research from the demand curve estimators we derive estimates of exact consumers surplus and deadweight loss which are the most widely used welfare and economic efficiency measures in areas of economics such as public finance we also develop tests of the symmetry and downward sloping properties of compensated demand we work out asymptotic normal sampling theory for kernel and series nonparametric estimators as well as for the parametric case the paper includes an application to gasoline demand empirical questions of interest here are the shape of the demand curve and the average magnitude of welfare loss from a tax on gasoline in this application we compare parametric and nonparametric estimates of the demand curve calculate exact and approximate measures of consumers surplus and deadweight loss and give standard error estimates we also analyze the sensitivity of the welfare measures to components of nonparametric regression estimators such as the number of terms in a series approximation

corporate tax evasion with agency costs this paper examines corporate tax evasion in the context of the contractual relationship between the shareholders of a firm and a tax manager who possesses private information regarding the extent of legally permissible reductions in taxable income and who may also undertake illegal tax evasion using a costly state falsification framework we characterize formally the optimal incentive compensation contract for the tax manager and in particular how the form of that contract changes in response to alternative enforcement policies imposed by the taxing authority the optimal contract may adjust to offset at least partially the effect of sanctions against illegal evasion and we find a new and policy relevant non equivalence result penalties imposed on the tax manager are more effective in reducing evasion than are those imposed on shareholders

taxes institutions and innovation theory and international evidence we develop an international model of the design of institutions for regulating innovative activities of private corporations informational limitations faced by the social planner preclude complete contracting with private firms corporate innovation creates positive and negative externalities the social planner in each country takes into account the legal system in place and designs an umbrella of institutions that include a menu of organizational forms liability structures corporate taxes and subsidies we show that limited liability may be accompanied by excessive innovation however when the nonmonetized benefits are very high private firms may be too conservative in innovation policies firms choose their organizational form and level of innovation consistent with private optimality with the optimal institutional design for each country we demonstrate that private innovation choices are aligned with social optimality in particular we show that the optimally designed corporate tax rate in each country is a decreasing function of its legal effectiveness using data from 63 countries over 2003 2018 we document supporting evidence mncs can take advantage of differential liability and corporate tax structures across national boundaries to circumvent institutional design constraints however when mncs generate positive externalities to host countries their governments may provide subsidies and incentives

an analysis of the principal agent problem most analyses of the principal agent problem assume that the principal chooses an incentive scheme to maximize expected utility subject to the agent s utility being at a stationary point an important paper of mirrlees has shown that this approach is generally invalid we present an alternative procedure if the agent s preferences over income lotteries are independent of action we show that the optimal way of implementing an action by the agent can be found by solving a convex programming problem we use this to characterize the optimal incentive scheme and to analyze the determinants of the seriousness of an incentive problem

the random utility hypothesis and inference in demand systems in this paper the authors examine the consequences of adopting the random utility hypothesis as an approach for randomizing a system of demand equations random utility models are appealing since they allow the usual assumption of deterministic utility maximizing behavior by each consumer to coexist with the apparent randomness across individuals that is exhibited by data their results show that the use of random utility models implies that the disturbances of the demand equations may not be homoskedastic but must be functions of prices and or income copyright 1989 by the econometric society

tax structure and tax compliance a model of individual tax compliance behavior including evasion and avoidance is developed and estimated the model recognizes the importance of marginal income tax rates payroll tax contributions and benefits and the probabil ity of detection and the penalty on unpaid taxes share equations for avoidance evasion and reported income are estimated using individual level data the estimation results indicate that the tax base rises with higher benefits for payroll tax contributions and falls with higher marginal tax rates the base also falls with more severe penalties and more certain detection of evasion as individuals substitute towards avoid ance income t he methods by which individuals reduce their tax liabilities take a variety of legal and illegal forms all of which are influenced at least in part by incentives created by the tax structure these methods can be broadly classified as avoid ance and evasion tax avoidance is any legal activity that lowers taxes such as worker substitu tion between wage and nonwage compensation tax evasion is the reduction in tax liabilities by illegal means such as underreporting income on tax returns despite extensive but separate literatures on avoidance and evasion we know very little about the tax base response to changes in tax structure it is the purpose of this paper to examine the role that the tax structure plays in compliance there are several reasons for the persistence of the compliance puzzle most prominent is the absence of detailed individual data that would allow a full empirical specification of all factors affecting compliance this difficulty is most evi dent when searching for individual data on the evasion compliance decision even when avail able data have never allowed in the same work the construction of both tax and audit variables 1 clearly data availability is even more problem atic when looking at the choice among evasion avoidance and reported income in addition pre vious work has not looked at the avoidance evasion compliance decision as a joint process even though these decisions are made simultane ously 2 further both strands of the literature have ignored another factor that may affect the compliance decision the benefits that accrue from participation in payroll programs if benefits are tied only to taxable income then their presence gives individuals an incentive to pay taxes in short there has been no empirical work that analyzes the effects of tax rates probabilities penalties and payroll benefits on avoidance and evasion choices of individuals in this paper we provide such an analysis we first develop a theory of individual choice among the three types of compensation we then esti mate the resulting share demand equations using a unique data set which has detailed information on the compensation paid to roughly one quarter of the labor force in jamaica in 1983 from these data we are able to derive measures of reported taxable income evasion income and avoidance income for individual workers in the formal sec tor we are also able to construct measures of the marginal income tax rate marginal payroll taxes and benefits the probability of detection and the penalty on evasion for individual workers we are therefore able to estimate for the first time the responses of workers to the full range of tax structure parameters section i presents the theoretical model of worker compensation choice and the empirical specification of the model section ii discusses the jamaican tax system data and variable con struction are discussed in section iii estimation results are presented in section iv the final section summarizes the main results

from the editors endogeneity in international business research this essay builds on the exposition by thomas et al and focuses on analyzing cause and effect in international business research we attempt to explain how endogeneity problems occur and why they are so prevalent in international business research in a non technical fashion we then discuss the importance of explicitly identifying how the chosen research design best approximates a randomized controlled experiment finally we provide some guidelines on achieving this goal and emphasize the practices that seem most relevant to jibs reviewers in evaluating high quality international business research

urban water demand with periodic error correction monthly demand for publicly supplied water to u s residences and businesses is estimated from a 10 year panel of 167 cities a periodic error correction model integrates monthly annual and long run time scales statistical consistency is validated by unit root tests adapted to the monthly frequency water and wastewater price elasticity of demand is estimated by sector calendar month and time horizon

demand customer base line and demand response in the electricity market a survey the increasing use of demand side management as a tool to reliably meet electricity demands at peak time has stimulated interest among researchers consumers and producer organiza tions managers regulators and policymakers this research reviews the growing literature on models which are used to study demand customer base line cbl and demand response in the electricity market after characterizing the general demand models the cbl based on which the demand response models are studied is reviewed given the experience gained from the review and existing conditions the study combines an appropriate model for each case for a possible application to the electricity market moreover it discusses the implications of the results in the literature these aspects are studied independently the main contribution of this survey is attributed to the treatment of the three issues as sequentially interdependent the review is expected to enhance the understanding of the demand cbl and demand response in the electricity market and their relationships the objective is conducted through a combination of demand and supply side managements in order to reduce demand through different demand response programs during peak times this enables electricity suppliers to save costly electricity generation and at the same time reduce energy vulnerability