Academic Journal
Corporate tax, R&D and export decisions: Evidence from European firms.
| العنوان: | Corporate tax, R&D and export decisions: Evidence from European firms. |
|---|---|
| المؤلفون: | Bournakis, Ioannis1 (AUTHOR) ioannis.bournakis@skema.edu, Romero‐Jordán, Desiderio2 (AUTHOR) |
| المصدر: | Review of International Economics. Nov2024, Vol. 32 Issue 5, p2226-2258. 33p. |
| مصطلحات موضوعية: | *EXPORT duties, *CORPORATE taxes, *TAX rates, *INTERNATIONAL markets, *INDUSTRIAL productivity, SENSITIVITY analysis |
| مستخلص: | The paper presents a unified framework for analyzing the impact of corporate taxation on R&D and exporting, considering firm productivity heterogeneity and sunk costs. We empirically examine three hypotheses using data from 7819 European firms spanning 2001–2014. We propose that: (a) an increase in corporate tax reduces the likelihood of innovation, (b) an increase in corporate tax reduces the likelihood of exporting, and (c) firms that innovate are more likely to enter foreign markets. On average, a high Effective Average Tax Rate (EATR) lowers the probability of investing in R&D and exporting by 2.3% and 1.41%, respectively. For firms with low Total Factor Productivity (TFP), the adverse effect of taxation on R&D investment ranges from 3.71% in our baseline analysis to 12.9% in our sensitivity analysis. Interestingly, while EATR positively influences the export decisions of high‐TFP firms, a higher EATR can reduce the export probability by up to 25.5% for firms at the lower end of the TFP distribution. Our findings demonstrate a causal relationship between firm heterogeneity and their capacity to mitigate the distortions caused by higher taxes. From a policy perspective, our results suggest that fostering innovation is essential for firms aiming to expand into international markets. [ABSTRACT FROM AUTHOR] |
| Copyright of Review of International Economics is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.) | |
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