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
Dokumenttyp:	Arbeitspapier
Erscheinungsjahr:	2014
Titel einer Zeitschrift oder einer Reihe:	ZEW Discussion Papers
Band/Volume:	14-114
Ort der Veröffentlichung:	Mannheim
Sprache der Veröffentlichung:	Englisch
Einrichtung:	Fakultät für Betriebswirtschaftslehre > ABWL u. Betriebswirtschaftliche Steuerlehre II (Spengel 2006-) Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC-Schriftenreihe:	Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Fachgebiet:	330 Wirtschaft
Fachklassifikation:	JEL: H25 , L22 , M41,
Freie Schlagwörter (Englisch):	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.