100

This PhD project contributes to the literature on corporate finance by analyzing several issues related to the impact of taxation on the financial decision making of companies. The main research question of this doctoral project is twofold. First, I analyze how heterogeneity among national tax systems distorts the financial decisions of a multinational enterprise. I investigate the consequences of a series of alternative international tax designs on the strategy of a multinational enterprise regarding the cross-border distribution of its investment and the choice of its financing behavior. I analyze, inter alia, a combination of an allowance for corporate equity and a comprehensive business income tax and the introduction of a system of consolidation and formulary apportionment. Moreover, I investigate how international tax consolidation can address the distortion related to heterogeneous national tax systems. Secondly, I empirically measure how the tax discrimination between debt and equity affects the capital structure of a company by comparing the debt ratio of treatment and control companies before and after the introduction of an equity tax shield (difference-in-differences regression). Consistent with the theoretical prediction, the estimated results show that the introduction of an equity tax shield has a significant negative effect on the debt ratio of a company. This effect amounts to approximately 2–7%, meaning that a classical tax system encourages companies to use an average of 2–7% more debt than when there is an equal tax treatment of debt and equity. JEL Codes: F23, G32, H25, H32, K34