Contemporary Accounting Research Vol. 37 No. 4 2020
R&D Investments and Tax Incentives: The Role of Intra‐Firm Cross‐Border Collaboration*
Abstract
U.S. multinational corporations increasingly use intra‐firm, cross‐border research collaboration to disperse R&D across different countries. This paper investigates the implications of such collaboration on the abilities of firms to garner benefits from R&D tax incentives. We find that the association between R&D intensity and tax incentives is three to five times larger when firms have extensive cross‐border collaboration connected to a country. We also find that the effect is stronger when local intellectual property protection is weaker and when local innovation resources are higher. Our results suggest that cross‐border collaboration helps firms achieve more tax‐efficient R&D investments both by reducing the nontax frictions posed by weak intellectual property protection and by increasing the nontax benefits of foreign R&D.
- DOI
- 10.1111/1911-3846.12588
- Volume
- 37
- Issue
- 4
- Pages
- 2523-2557
- Language
- en
- Sources
- bibtex:phds-export.bib crossref openalex