Research

Publications

Withholding Taxes, Compliance Cost and Foreign Portfolio Investment (with M. Jacob), The Accounting Review, 2023, Vol 98 (2), pp. 299-327 

Data access: Withholding tax data


Incumbency and expectations of fiscal rule compliance: Evidence from surveys of German policy makers (with F. Heinemann and E. Janeba), European Journal of Political Economy, 2022, Vol 72, 102093

Taxation and the External Wealth of Nations: Evidence from Bilateral Portfolio Holdings (with H. Huizinga, W. Wagner and J. Voget), Journal of International Money and Finance, 2022, Vol 122, 102548 

Thinking Outside the Box: The Cross-border Effect of Tax Cuts on R&D (with T. Schwab), Journal of Public Economics, 2021, Vol 204, 104536

Additional Material: Online Appendix


Cross-Border Effects of R&D Tax Incentives (with B. Knoll, N. Riedel, T. Schwab, and J. Voget), Research Policy, 2021, Vol 50 (9), 104326 

Mentioned by: Die Presse, Tax Foundation

International Taxation and Productivity Effects of M&As (with J. Voget), Journal of International Economics, 2021, Vol 131, 103438

Mentioned by: Joint Committee on Taxation (U.S. Congress), OECD  ▪ Data access: Cross-border taxation

Capital Gains Taxation and Funding for Start-Ups (with A. Edwards), Journal of Financial Economics, 2020, Vol 138 (2), pp. 549-571

Mentioned by: Financial Post, Committee on Equality (Sweden)

Taxing Away M&A: Capital Gains Taxation and Acquisition Activity (with L. Feld, M. Ruf, U. Schreiber, and J. Voget), European Economic Review, 2020, Vol 128, 103505

Mentioned by:  Tax Working Group (New Zealand) ▪ Data Access: Corporate capital gains tax data

Fiscal Competition and Public Debt (with E. Janeba), Journal of Public Economics, 2018, Vol 168, pp. 47-61

Working Papers

Business model digitalization, competition, and tax savings

(joint with Elisa Casi-Eberhard, Petro Lisowsky, and Barbara Stage)

Paper

We examine the effect of business model digitalization on competition and how corporate tax savings through digitalization may augment this relationship. Global policymakers express concern that digitalization-related tax savings unfairly benefit the competitive standing of rival firms over their competitors. Using textual analysis techniques to identify firms’ business models, we show that rivals’ adoption of a digital business model leads to negative economic effects on the performance of their non-digitalizing competitors. We estimate that a one standard deviation increase in the share of digitalized rivals in a market reduces a competitor’s market share by 4.6%. Suggesting significant tax savings from digitalizing, we also find that digitalizing rivals substantially reduce their effective tax rates, mostly by increased use of tax havens. However, when we test whether the detected competitive externalities vary depending on the share of digitalizing rivals with versus without substantial digitalization-related tax savings, we find the economic magnitudes of their effects are quantitatively similar. Therefore, contrary to policymakers’ concerns of digitalization-related tax savings unfairly shaping competition, our findings suggest that tax savings from digitalization is not a key driver of altering competition between digitalized and non-digitalized firms. 

Altruistic Behavior and Government Interventions in Times of Crisis

(joint with Cornelius Schneider and Marina Schröder)

Paper

We analyze the response of charitable donations to restrictions on civil liberties. We argue that restrictions can either increase altruistic behavior through enhancements in the perceived benefit of donations, or crowd out altruistic behavior due to utility losses associated with the restrictions. Using data on donations in Norwegian grocery stores, we find evidence for a significant increase in donation rates following the implementation of restrictions. Importantly, this rise appears to be driven by individuals not directly affected by the restrictions. This suggests that the influence of civil liberty restrictions on individual donation behavior depends strongly on the personal impact of these restrictions for the individual. 

Private Merger Negotiation Responses to Ongoing Tax Legislation

(joint with Alexander Edwards, Shane Heitzman, and Sandy Klasa)

Paper

Target valuation hinges on expected after-tax cash flows. But how do buyers and sellers adapt when future tax laws are uncertain or developing? Using hand-collected data, we examine the impact of tax policy developments on contemporaneous private merger negotiations surrounding U.S. corporate tax reform legislation in 2017. During the tax legislation period, bidders raise their offer prices relative to their initial bids when the target's expected gain from reform is high. The bidder's response to the target's gain from tax reform is concentrated in deals with competing bidders, when the target has a higher quality management team, or when the target's CEO is more involved in negotiations. When the target CEO is involved, the bidder's response to expected tax gains is strongest when the target CEO's incentives are more aligned with other shareholders. Individual bid increases in response to expected tax gains occur shortly after legislative events. 

Are Domestic Workers Affected by Foreign Tax Changes?

(joint with David Agrawal)

Paper, Data

Multinational companies are affected by tax reforms both at home and abroad. We study the effect of foreign corporate tax reforms on domestic employment and wages. To do this, we link the universe of Norwegian firm-level foreign direct investment (FDI) data with the universe of Norwegian individual tax returns. Exploiting the staggered implementation of tax reforms in foreign countries which affect the subsidiaries of Norwegian firms, we find that domestically-owned Norwegian firms see domestic salaries increase by 2.4% following foreign tax cuts. We conclude that if all foreign profits are repatriated, approximately 18% of the foreign tax burden is borne by workers.

 

Work in Progress