Corporate Taxes, Profit Shifting and the Location of Intangibles within Multinational Firms

Intangible assets are one major source of profit shifting opportunities due to a highly intransparent transfer pricing process. Our paper argues that multinational enterprises (MNEs) optimize their profit shifting strategy by locating shifting–relevant intangible property at affiliates with a low statutory corporate tax rate. Using panel data for European MNEs and controlling for unobserved time–constant heterogeneity between affiliates, we find that the lower a subsidiary’s tax rate relative to other affiliates of the multinational group the higher is its level of intangible asset investment. This effect is statistically and economically significant, even after controlling for subsidiary size and accounting for a dynamic intangible investment pattern.corporate taxation; multinational enterprise; profit shifting; intangible assets; micro level data

Corporate Taxes, Profit Shifting and the Location of Intangibles within Multinational Firms

Intangible assets are one major source of profit shifting opportunities due to a highly intransparent transfer pricing process. Our paper argues that multinational enterprises (MNEs) optimize their profit shifting strategy by locating shifting–relevant intangible property at affiliates with a low statutory corporate tax rate. Using panel data for European MNEs and controlling for unobserved time–constant heterogeneity between affiliates, we find that the lower a subsidiary’s tax rate relative to other affiliates of the multinational group the higher is its level of intangible asset investment. This effect is statistically and economically significant, even after controlling for subsidiary size and accounting for a dynamic intangible investment pattern

Lost in translation: Toward a formal model of multilevel, multiscale medicine

For a broad spectrum of low level cognitive regulatory and other biological phenomena, isolation from signal crosstalk between them requires more metabolic free energy than permitting correlation. This allows an evolutionary exaptation leading to dynamic global broadcasts of interacting physiological processes at multiple scales. The argument is similar to the well-studied exaptation of noise to trigger stochastic resonance amplification in physiological subsystems. Not only is the living state characterized by cognition at every scale and level of organization, but by multiple, shifting, tunable, cooperative larger scale broadcasts that link selected subsets of functional modules to address problems. This multilevel dynamical viewpoint has implications for initiatives in translational medicine that have followed the implosive collapse of pharmaceutical industry 'magic bullet' research. In short, failure to respond to the inherently multilevel, multiscale nature of human pathophysiology will doom translational medicine to a similar implosion

Theory and empirics of an affine term structure model applied to European data

The basic asset pricing equation is adapted to include the effects of unemployment, consumers’ expectations, the price level and money supply on money market rates and government bond yields. Expected consumption growth is modelled using European unemployment figures and Eurostat Consumer Confidence Index. The price level is incorporated in the aggregate marginal utility function using production price index (PPI) as a proxy. An affine term structure model is derived using a state space system with an observation equation which links observable yields to these macroeconomic variables and a state equation which describes the dynamics of these variables. Unemployment and consumer confidence index will have a shift and a slope effect on the yield curve, for front-end yields moving faster than in the long end. Production price index exhibits a twist effect (flattening or steepening of the curve) which results in front-end yields shifting in opposite directions to the long end of the curve. This empirical work shows that yields are negatively correlated to money supply, as expected in classical IS-LM models. And that money supply exhibits a slope effect, with the front-end of the curve shifting faster than the longer end.Macroeconomic releases, Term structure of interest rates, Dynamic factors, Affine term structure models

Profit-led or Wage-led Regimes: the Effect ofSaving Behaviours

In this article, we modify the saving function of the Bhaduri-Marglin model and obtain a hump-shaped curve of output in function of wage-share: the nature -exhilarationist or stagnationist- of the economic regime depends on the level of income distribution. Economic policy can thus consist of shifting income distribution by redistributive policy in order to stimulate output. These conclusions remain valid in open economy, even though the exhilarationist regime is then more likely to arise. At last, we adopt a dynamic perspective by adding a wage equation to the model, which is thus characterised either by cycles or an underemployment equilibrium.Cycles, Income share, Post-Keynesian theory, Saving, Unemployment

Corporate Taxes and the Location of Intangible Assets Within Multinational Firms

Intangible assets, like patents and trademarks, are increasingly seen as the key to competitive success and as the drivers of corporate profit. Moreover, they constitute a major source of profit shifting opportunities in multinational enterprises (MNEs) due to a highly intransparent transfer pricing process. This paper argues that for both reasons, MNEs have an incentive to locate intangible property at affiliates with a relatively low corporate tax rate. Using panel data on European MNEs and controlling for unobserved time--constant heterogeneity between affiliates, we find that the lower a subsidiary's tax rate relative to other affiliates of the multinational group the higher is its level of intangible asset investment. This effect is statistically and economically significant, even after controlling for subsidiary size and accounting for a dynamic intangible investment pattern

Corporate Taxes and the Location of Intangible Assets Within Multinational Firms

Intangible assets, like patents and trademarks, are increasingly seen as the key to competitive success and as the drivers of corporate profit. Moreover, they constitute a major source of profit shifting opportunities in multinational enterprises (MNEs) due to a highly intransparent transfer pricing process. This paper argues that for both reasons, MNEs have an incentive to locate intangible property at affiliates with a relatively low corporate tax rate. Using panel data on European MNEs and controlling for unobserved time--constant heterogeneity between affiliates, we find that the lower a subsidiary's tax rate relative to other affiliates of the multinational group the higher is its level of intangible asset investment. This effect is statistically and economically significant, even after controlling for subsidiary size and accounting for a dynamic intangible investment pattern.multinational enterprise; intangible assets; tax planning; micro level data

Service branding: the development of a typology of service brands at the corporate level

This paper shows and discusses a typology of service brands at the corporate level. The typology emerges from a combination of two constructs: ‘customer base’ and ‘competitive environments’. The service brands are conceptualized as modes of maintenance, surveillance and dynamic changes, which are shown in a 2x2 matric. The service brand typology is discussed, and the paper explains that dynamic change is preferred in turbulent, competitive, complex and dynamic environments with a shifting and dynamic customer base. A set of implications is offered, i.e. theoretically that a high degree of customer and competitor focus is in alignment with the service brand conceptualized as dynamic change. The paper contributes to the extant knowledge of service branding by its discussion of a typology of service brands at the company brand level in service enterprises

Robust laser frequency stabilization by serrodyne modulation

We report the relative frequency stabilization of a distributed feedback erbium-doped fiber laser on an optical cavity by serrodyne frequency shifting. A correction bandwidth of 2.3 MHz and a dynamic range of 220 MHz are achieved, which leads to a strong robustness against large disturbances up to high frequencies. We demonstrate that serrodyne frequency shifting reaches a higher correction bandwidth and lower relative frequency noise level compared to a standard acousto-optical modulator based scheme. Our results allow to consider promising applications in the absolute frequency stabilization of lasers on optical cavities.Comment: 3 pages, accepted for publication in Optics Letter