Research

Research Interests

  • Empirical Tax Research

  • Taxation and Investment Decisions

  • Taxation and Payout Policies

  • Tax Avoidance

  • Tax Transparency

Working Papers

  • with Martin Jacob

  • Latest Draft: July 2022


This paper examines the corporate investment effect of a time limit on the use of net operating losses (NOLs). We predict that, when countries limit the use of NOLs to a few years instead of allowing indefinite use, managers of loss-making firms have an incentive to increase investments to recover these losses quickly. Using exogenous shocks to profitability from two earthquakes in Italy and variation in the tax treatment of NOLs over time, we find support for this prediction: when the use of NOLs is restricted in time (unrestricted), firms facing losses increase (do not increase) investment. This effect is stronger for firms with shorter investment horizons, in more profitable industries, and with less volatile profits. We provide external validity for this finding using a large panel of firms from European Union countries exploiting variation in tax regimes. These results indicate that restricting loss offsets can increase investments.

  • with Antonio De Vito, Martin Jacob, and Robert Vossebürger

  • Latest Draft: March 2022

This paper examines the role of personal income taxes in multinationals’ corporate tax–induced profit shifting. As required by corporate tax rules in most countries, firms need economic substance in low–corporate tax countries to justify profit shifting to these countries. Because higher personal income taxes increase the cost of labor and thus the cost of providing economic substance, we argue that personal income taxes can mute corporate tax–induced profit shifting. Using data on personal and corporate income taxes from 26 European countries, we find that personal income taxes substantially mute profit shifting to low–corporate tax countries. This effect is stronger if the parent country has strict economic substance requirements to curb tax avoidance. Our results show important interactions between personal and corporate income taxes that shape multinationals’ profit-shifting decisions.

  • Single Authored, Job Market Paper

  • Latest Draft: November 2021

  • Accepted at the EAA Doctoral Colloquium in 2020

This paper examines the effect of dividend taxation on the ownership structure of private firms. I exploit a German dividend tax increase that only affects corporate shareholders owning a minority stake. Using data on private German firms and their shareholders, I find that corporate shareholders reduce their minority stakes in firms after the dividend tax reform. This result is in line with the notion that, because minority shareholders have no decision making rights to influence the payout policy, they can only react to the reform by selling their shares. The effect is larger for minority shareholders with liquidity needs and for minority shareholders facing shareholder conflicts. In addition, I find that the largest shareholder of the firm buys the minority stake, resulting in greater ownership concentration. My findings extend the prior literature that finds no effect of dividend taxes on the ownership structure of private firms.

Tax Depreciation and Investment Decisions: Evidence from the Leasing Sector

This paper examines the investment response of finance lease firms to a change in tax depreciation rules. Using an exogenous shock in Germany, our results suggest that finance lease companies, the only organisations affected by such a change, reduce their investments following the abolition of a beneficial and long-standing tax depreciation method. We provide evidence that the exposure of finance lease firms to regulatory requirements moderates the investment effect. Additional cross-sectional tests indicate a larger investment response for finance lease firms with a product portfolio specialised in mobile assets and, in particular, office and IT assets. Our findings add to the existing contributions on the effect of tax depreciation on investment decisions and to the limited literature looking into the effect of taxation on financial institutions.