02040cas a2200265 a 4500 AALejournalIMF004594 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451866032 1018-5941 BD-DhAAL BD-DhAAL Laeven, Luc. Capital Structure and International Debt Shifting / Luc Laeven, Harry Huizinga, Gaetan Nicodeme. Washington, D.C. : International Monetary Fund, 2007. 1 online resource (37 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper presents a model of a multinational firm's optimal debt policy that incorporates international taxation factors. The model yields the prediction that a multinational firm's indebtedness in a country depends on a weighted average of national tax rates and differences between national and foreign tax rates. These differences matter because multinationals have an incentive to shift debt to high-tax countries. The predictions of the model are tested using a novel firm-level dataset for European multinationals and their subsidiaries, combined with newly collected data on the international tax treatment of dividend and interest streams. Our empirical results show that corporate debt policy indeed not only reflects domestic corporate tax rates but also differences in international tax systems. These findings contribute to our understanding of how corporate debt policy is set in an international context. Mode of access: Internet Huizinga, Harry. Nicodeme, Gaetan. IMF Working Papers; Working Paper ; No. 2007/039 Full text available on IMF http://elibrary.imf.org/view/journals/001/2007/039/001.2007.issue-039-en.xml IMF e-Library