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on International Activities of Firms |
| By: | Alice Chiocchetti (Paris School of Economics); Manon François (Stanford University); Laure Heidmann (CREST and INSEE); Giulia Aliprandi (Paris School of Economics and EU Tax Observatory) |
| Abstract: | This paper quantifies how profit shifting erodes workers’ earnings by reducing profit-sharing payouts in French multinational firms. We leverage newly available administrative microdata on the global activity of multinational firms linked to employer-employee data to build a credible counterfactual of profits and profit-sharing absent profit shifting. We estimate that large French multinationals shift 19% of their foreign profits annually to low-tax jurisdictions, resulting in €10.3 billion shifted out of France and €3.7 billion in lost tax revenues. We show that profit shifting reduces annual employees’ earnings by 2.6%. Low-income workers are disproportionately affected. The bottom 10% of workers lose 3.2% of wages, compared to 2.3% for top 10% earners. Changing the profit-sharing formula to account for global profitability, rather than subsidiary-level profitability, would increase wages by 4.1% for workers in profit-shifting subsidiaries. |
| Keywords: | Multinational Firms, Profit shifting, Tax revenue, Incidence |
| JEL: | F23 H25 H26 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:dbp:wpaper:039 |
| By: | Emek Basker; Fariha Kamal |
| Abstract: | This paper examines the impact of Russia's 2014 food-import ban on U.S. firms that exported banned products to Russia. Using confidential customs transaction data, we implement triple-difference and dosage-response approaches to identify how firms adjust to the sudden loss of a market. Following the ban, treated firms experienced a 30 percentage-point decrease in the probability of exporting banned food to Russia relative to control firms. However, there is substantial heterogeneity by pre-ban reliance on the Russian market: heavily reliant firms were significantly less likely to survive once the ban was in place, and survivors experienced large reductions in revenue (19%) and total export value (49%) for each standard deviation increase in Russian market exposure. We find evidence of export redirection to neighboring countries, though it is insufficient to offset losses. Any negative impacts on survivors dissipate by five years post-ban. |
| Keywords: | sanctions, import bans, U.S.-Russia trade |
| JEL: | F51 F13 F14 L66 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:25-79 |
| By: | Mannarino Valentin |
| Abstract: | This paper applies machine learning techniques to predict which manufacturing firms in Colombia are likely to become exporters, using data from the Encuesta Anual Manufacturera (EAM) and Encuesta de Desarrollo e Innovación Tecnológica (EDIT) for the period 2015–2019. The objective is to estimate each firm’s “distance to export” through a probability score learned from the characteristics of existing exporters. Among the different algorithms tested, Logit with LASSO regularization delivers the best predictive performance, correctly identifying nearly three out of four actual exporters. Building on these predictions, the study introduces an exporting score, a probability measure that ranks firms by their proximity to the export margin. This score captures heterogeneity among non-exporters, anticipates entry and exit dynamics, and highlights sectoral and geographic clusters of latent export potential. In addition, the analysis shows that a set of firm level characteristics consistently emerge as the most relevant predictors across models: importer status, firm size, and combined spillovers, complemented by operational variables such as value added, inventories, and quality certification. The findings offer valuable insights for export promotion policies, enabling more targeted support for firms likely to enter international markets. |
| JEL: | F1 L2 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:aep:anales:4816 |
| By: | Sho HANEDA; Hyeog Ug KWON |
| Abstract: | Since China's accession to the WTO, the impact of increased competition from Chinese imports (the "China shock") on employment and productivity in many developed countries has become a major concern for policy makers. The share of manufacturing workers in the total number of employees has been declining, and Japan is no exception. The paper empirically examines the impact of the increase in imports from China on employment using questionnaire information of the Census of Manufactures and the Economic Census for Business Activity as well as the Trade Statistics of Japan and the National Freight Flows Survey (Logistics Census) . The main results are twofold. First, imports of intermediate products from China have a positive impact on employment at Japanese firms. Second, imports of capital products from China might have a negative effect on employment growth. Thus, reducing trade barriers in intermediate products, participating in global value chains, and supporting inter- and intra-industry labor mobility for specific workers, regions, and industries that are negatively affected by capital goods are key to employment growth in Japan. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25123 |
| By: | Matěj BAJGAR; Keiko ITO; Jonathan TIMMIS |
| Abstract: | We study how R&D spillovers propagate through buyer–supplier networks. The R&D tax credit for large firms in Japan—originally based on incremental increases in R&D expenditures—was revised in 2003 to cover total R&D expenditures. This reduced the cost of marginal R&D outlays for large firms below the ceiling on R&D expenditure, but not for large firms above the ceiling or for SMEs. In a difference-in-differences setting, we find that the reform increased R&D expenditure, innovative output and sales of the treated firms. We further present evidence of positive forward spillovers to downstream firms: the reform led to productivity increases among firms that had a greater share of suppliers treated by the reform. Conversely, we do not find any evidence of backward spillovers to upstream firms. We also do not find any robust effects of the reform on the R&D expenditure and economic performance of Japanese firms' overseas affiliates. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25127 |
| By: | Banri ITO; Eiichi TOMIURA |
| Abstract: | This paper examines the effect of initiating cross-border data flows on firm productivity, using original survey data from Japanese manufacturing and service firms collected in 2019 and 2021, merged with annual productivity measures over 2019–2022. The survey identifies new entrants into cross-border data transfers, enabling a difference-in-differences design that compares “switchers†to firms that either do not collect data or collect data only domestically. We estimate the average treatment effect on the treated using regression-adjustment, inverse probability weighting, and doubly robust AIPW DID estimators, controlling for exporter status, multinational affiliation, R&D intensity, and ICT cost intensity. The results show that firms with higher initial productivity are more likely to start transferring data internationally, which is consistent with self-selection patterns documented in the export- and FDI-related literature. Entry into cross-border data flows is associated with significant productivity gains, which become particularly pronounced in the year after entry. These findings provide rare firm-level evidence from Japan, while also offering broader insights for data-governance debates by highlighting the potential productivity costs of overly restrictive cross-border data regulations. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25125 |
| By: | Kyoji FUKAO; Tetsushi HORIE; Tomohiko INUI; Takafumi KAWAKUBO; Young Gak KIM; Hyeog Ug KWON; Hongyong ZHANG |
| Abstract: | This study examines the extent to which imported intermediate inputs lead to biased estimates of firm-level total factor productivity (TFP) growth, a phenomenon referred to as “offshoring bias.†To this end, we construct a novel firm-level dataset by linking the Japanese customs data with the financial information. We newly develop firm-specific import deflators at the granular Harmonized System 9-digit product level and use them to deflate import values. Comparing TFP estimates based on this approach with those based on commonly used industry-level deflators reveals that the conventional method tends to overestimate TFP growth. Moreover, our regression results indicate that the offshoring bias is more pronounced among firms with higher import shares. This suggests that conventional TFP estimation methods may systematically overestimate productivity growth for firms that rely to a greater extent on imported intermediate inputs. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25129 |
| By: | Alejandra Martinez; Dennis Novy; Carlo Perroni |
| Abstract: | A large literature has documented transitivity as a key feature of social networks: individuals are more likely connected with each other if they share common connections with other individuals. We take this idea to trading relationships between firms: firms are more likely to trade with each other if they share common trading partners. Transitivity leads to a clustered pattern of relationship formation and break-up. It is therefore important for understanding how firms meet and how shocks propagate through firm networks. We describe a method for detecting and quantifying transitivity in firm-to-firm transactions, based on systematic deviations from conditional independence across firm-to-firm relationships. We apply the method to Colombia-U.S. exporter-importer data and show in counterfactuals that transitivity is a significant and economically meaningful factor in how firm networks adjust to cost shocks. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2512.18893 |
| By: | Abdelaziz Fourati (SMU - South Mediterranean University Group); Amel Zenaidi; Maher Jeriji |
| Abstract: | ABSTRACT This research investigates the determinants of sustainability reporting practices within multinational companies (MNCs) and their subsidiaries, focusing on the mediating role of MNC parents and the moderating impact of cultural distance and local isomorphism. We conducted a content analysis of the stand‐alone sustainability reports of 187 MNCs and 332 subsidiaries over a decade (2011–2020), comparing 1594 subsidiary reports with 983 parent reports. A path analysis approach assessed the mediating role of MNC parents, while random effects panel models assessed the moderating effects of local isomorphism and cultural distance. The results indicate that MNC parents positively and significantly influence the adoption of sustainability reporting practices by their subsidiaries. However, the successful implementation of these practices is moderated by local institutional context and cultural distance. Subsidiary transparency was positively influenced by industry characteristics and effective local governance, while financial constraints and the degree of alignment with international standards played a complex role in reporting practices. Our research indicates that MNCs need to adjust their global approaches to fit into local environments and improve the transparency of subsidiaries by utilizing industry‐specific tactics and robust local management. Policymakers need to prioritize enhancing local governance structures to improve sustainability reporting. This research contributes to the field of institutional theory by demonstrating how local isomorphism affects the dissemination of reporting practices within MNCs. Furthermore, it is one of the few recent studies to examine sustainability reports in‐depth, analyzing their content and assessing the extent to which cultural distance affects the adoption of transparency practices global. |
| Keywords: | sustainability reporting, multinational companies (MNC), isomorphism, cultural distance, cultural distance isomorphism multinational companies (MNC) sustainability reporting |
| Date: | 2025–01–21 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05340815 |
| By: | Lorenzo Garlanda-Longueville (Université Paris Nanterre - EconomiX, Banque de France); Mathias Lé (Banque de France); Kevin Parra Ramirez (Banque de France, Sciences Po) |
| Abstract: | Tax havens represent the largest financing hub for financial institutions. For banks, they account for more than 20% of all cross-borders banking debt worldwide. Yet, our understanding of the underlying drivers remains limited. Drawing on a unique global dataset covering major international banks and tax havens – and employing a novel approach to isolate regulatory arbitrage – this paper finds that the location of cross-border intra-group debt held by multinational banks is shaped by tax considerations, even when regulatory differences are taken into account. For the first time, we provide direct evidence of profit shifting via debt shifting on a global scale, overcoming a key limitation of existing studies which typically rely on single-country data. Based on our sample data, we show that the magnitude of “excess” offshore banking debt globally recorded in tax havens is significant. |
| Keywords: | Profit shifting, Debt shifting, Multinational banks, Taxation, Intragroup transactions |
| JEL: | H26 G21 F23 F34 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:dbp:wpaper:036 |
| By: | Rocco Macchiavello; Josepa Miquel-Florensa; Nicolas de Roux; Eric Verhoogen; Mario Bernasconi; Patrick W. Farrell |
| Abstract: | Do the returns to quality upgrading pass through supply chains to primary producers? We explore this question in the context of Colombia’s coffee sector, in which market outcomes depend on interactions between farmers, exporters (which operate mills), and international buyers, and contracts are for the most part not legally enforceable. We formalize the hypothesis that quality upgrading is subject to a key hold-up problem: producing high-quality beans requires long-term investments by farmers, but there is no guarantee that an exporter will pay a quality premium when the beans arrive at its mills. An international buyer with sufficient demand for high-quality coffee can solve this problem by imposing a vertical restraint on the exporter, requiring the exporter to pay a quality premium to farmers. Combining internal records from two exporters, comprehensive administrative data, and the staggered rollout of a buyer-driven quality-upgrading program, we find empirical support for the key theoretical predictions, both the lack of pass-through of quality premia under normal circumstances and the possibility of a buyer-driven solution through a vertical restraint. Calibration of the model suggests that one-third to two-thirds of the (substantial) gains from the program accrue to farmers, with the vertical restraint playing a critical role. The results are consistent with the hypotheses that quality upgrading can provide a path to higher incomes for farmers, but also that it is unlikely to be viable under standard market conditions in the sector. |
| JEL: | F61 L23 O12 Q12 Q13 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34610 |