Tax avoidance and vertical interlocks within multinational enterprises

Arbeitspapier

This study investigates to what extent multinational enterprises appoint managers jointly at the headquarter and a foreign subsidiary (vertical manager interlocks, VMIs) in order to facilitate tax planning. We use a cross-section data set taken from the AMADEUS database to show that VMIs are observed more frequently in MNEs with a higher potential for tax-induced profit shifting. We also provide evidence indicating that the implementation of VMIs is motivated by an internal principal-agent conflict arising from conflicting interests between the MNE and high-tax subsidiary managers. Finally, we show that the use of VMI structures is associated, ceteris paribus, with a lower effective tax rate.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: arqus Discussion Paper ; No. 270

Classification and Topics

• Classification: Wirtschaft ; Business Taxes and Subsidies including sales and value-added (VAT) ; Tax Evasion and Avoidance ; Personnel Management; Executives; Executive Compensation
• Subject: management structure ; profit shifting ; principal-agent-theory

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Giese, Henning ; Koch, Reinald ; Gamm, Markus
• Event: Veröffentlichung
• (who): Arbeitskreis Quantitative Steuerlehre (arqus)
• (where): Berlin
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/260591
• Last update: 10.03.2025, 11:44 AM CET