Tax planning of R&D intensive multinationals


Heckemeyer, Jost H. ; Richter, Katharina ; Spengel, Christoph


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URL: https://ub-madoc.bib.uni-mannheim.de/37462
URN: urn:nbn:de:bsz:180-madoc-374624
Document Type: Working paper
Year of publication: 2014
The title of a journal, publication series: ZEW Discussion Papers
Volume: 14-114
Place of publication: Mannheim
Publication language: English
Institution: Business School > ABWL u. Betriebswirtschaftliche Steuerlehre II (Spengel)
Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: H25 , L22 , M41,
Keywords (English): Corporate taxation , organizational design , survey data
Abstract: The allocation of management and control in the business decision process finds expression in the coordination intensity between agents in the firm. We develop and test a theory, based on the organizational design literature, for the intensity in which the tax department strives to coordinate with managers from other business units in order to intervene in investment decisions. Our theoret- ical considerations predict that R&D intensity is an important determinant of the tax department's role. Using data from a confidential survey taken in 2012 of top financial and tax managers of very large multinational companies, repre- senting 8% of business R&D spending in the OECD, we indeed find supporting evidence that in R&D intensive multinational firms the tax department operates more as a controller than as a manager. In particular, tax departments of R&D intensive firms make less tax planning effort, are less ambitious to minimize the tax burden of the firm, are later involved in the decision-making process of a new investment project, but are more likely to have a veto right in the decision on a new investment project as compared to less R&D intensive firms. Conditional on R&D intensity, however, the level of intangible assets in the firm is associ- ated with more tax planning efforts and ambitions. Our results are statistically significant and robust towards several sensitivity checks.

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Heckemeyer, Jost H. ; Richter, Katharina ; Spengel, Christoph (2014) Tax planning of R&D intensive multinationals. Open Access ZEW Discussion Papers Mannheim 14-114 [Working paper]
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