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dc.contributor.authorHopland, Arnt O.
dc.contributor.authorLisowsky, Petro
dc.contributor.authorMardan, Mohammed
dc.contributor.authorSchindler, Dirk
dc.date.accessioned2015-09-16T06:10:50Z
dc.date.available2015-09-16T06:10:50Z
dc.date.issued2015-09-16
dc.identifier.issn1500-4066
dc.identifier.urihttp://hdl.handle.net/11250/300080
dc.description.abstractThis paper examines the flexibility of multinational firms to use income-shifting strategies within a tax year to react to operating losses. We develop a theoretical model that considers how affiliate losses can be adjusted ex post (i.e., after financial outcomes are revealed) or ex ante (i.e., before financial outcomes are revealed) by using transfer prices and internal debt. Our model predicts that under ex-post income shifting, loss affiliates have lower transfer prices and internal leverage than profitable affiliates, whereas under ex-ante income shifting, affiliates feature the same transfer prices and internal capital structure, regardless of making losses. Using data on direct transfer payments and internal debt of Norwegian affiliates, we find empirical evidence that, under losses, transfer pricing provides flexibility to adjust income shifting ex post, while we do not find evidence for flexibility in the use of internal debt to shift income ex post. Our study extends prior literature on income shifting that focuses largely on profitable firms and does not consider transfer pricing and internal debt shifting concurrently.nb_NO
dc.language.isoengnb_NO
dc.publisherFORnb_NO
dc.relation.ispartofseriesDiscussion paper;21/15
dc.subjectincome shiftingnb_NO
dc.subjectlossesnb_NO
dc.subjectdebt shiftingnb_NO
dc.subjecttransfer pricesnb_NO
dc.titleIncome Shifting under Lossesnb_NO
dc.typeWorking papernb_NO


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