This study examines the flexibility of multinational firms to adjust their income-shifting strategies—whether using transfer pricing or internal debt—during the tax year to react to affiliates' operating losses. We develop the concept that under flexibility, multinationals can adjust their inter-affiliate payments ex post (i.e., after financial outcomes are revealed, but before the end of the tax year) to minimize worldwide tax payments. Without flexibility, multinationals must commit to their affiliates' income-shifting strategies ex ante (i.e., before financial outcomes are revealed). Our central prediction is that under ex post income shifting, loss affiliates report lower transfer prices and internal leverage than profitable affiliates; under ex ante income shifting, affiliates report the same transfer prices and internal capital structure, regardless of making losses. Using novel data on direct transfer payments and internal debt of Norwegian affiliates, we find empirical evidence that transfer pricing, particularly related to user fees, but not internal debt, provides flexibility to adjust income shifting ex post. In additional tests, we confirm that our results reflect flexibility rather than loss affiliates' poor performance. Our study should interest tax policymakers and researchers by identifying how various mechanisms allow multinational firms to shift income when they face losses. JEL Classifications: F23; H25; H87.

Purpose – The purpose of this paper is to investigate the relationship between student satisfaction with school facilities and exam results. Design/methodology/approach – The authors combined exam results in Norwegian lower secondary schools with results from a nationwide, mandatory and annual survey that measures student satisfaction over a five-year period. The data were analyzed using regression methods (ordinary least squares and fixed-effects estimation). Findings – The authors found a modest, yet significant, relationship between satisfaction with school facilities and exam results. This is in contrast to earlier studies using Norwegian data, which indicate no such relationship. The authors argue that the difference is probably due to the fact that they have richer data than what were available to the earlier studies of Norwegian schools, and that they used a direct measure of student satisfaction rather than formal and technical measures of facility conditions. Originality/value – This paper offers new evidence of the relationship between school facilities and student achievement and should be of great interest to academics, school leaders and policy makers.

Purpose – The purpose of this paper is to explore the relationship between satisfaction with learning environment and student effort, both in class and with homework assignments. Design/methodology/approach – The authors use data from a nationwide and compulsory survey to analyze the relationship between learning environment and student effort. The survey covers all students attending the seventh (last year of primary school) and tenth (last year of lower secondary school) grades in Norwegian compulsory education. Since the survey has been conducted every year since 2006/2007, we can apply panel data methods to reduce the potential for omitted variable problems. Findings – Student satisfaction with teacher guidance, materials and social environment plays an important role in stimulating effort both in class and with homework. Satisfaction with physical work conditions is of less importance, but does stimulate in-class effort among the younger students. Heterogeneity across the genders for tenth graders is also observed. In particular, bullying and satisfaction with teacher guidance are more important determinants for males’ than for females’ effort. Practical implications – The results indicate that school managers should focus attention on improving not only the quality of teachers and teaching materials, but also the social environment at the school in order to stimulate more student effort. Originality/value – The results contribute to the literature studying student effort and educational outcomes by providing information on how different school factors affect student effort.

We formulate the maintenance scheduling decision as a dynamic optimization problem, subject to an accelerating decay. This approach offers a formal, yet intuitive, weighting of the trade-offs involved when deciding a maintenance schedule. The optimal maintenance schedule reflects the trade-off between the interest rate and the rate at which the decay accelerates. The prior reflects the alternative cost, since the money spent on maintenance could be saved and earn interests, while the latter reflects the cost of postponing maintenance. Importantly, it turns out that it is sub-optimal to have a cyclical maintenance schedule where the building is allowed to decay and then be intensively maintained before decaying again. Rather, local governments should focus the maintenance either early in the building's life span and eventually let it decay towards replacement/abandonment or first let it decay to a target level and then keep it there until replacement/abandonment. Which of the two is optimal depends on the trade-off between the alternative cost and the cost of postponing maintenance.

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Purpose The purpose of this paper is to investigate a survey on critical success factor for the maintenance of local public buildings and how reported score values and factor rankings depend on characteristics (contingencies) of the local governments that participated. Design/methodology/approach The authors use data from a large-scale survey of Norwegian local governments that covered 66 per cent of all local governments and 80 per cent of the population. The authors combine these data with contingent information from public registers on demographics, fiscal, political and geographical characteristics. The authors run regressions to determine whether contingencies affect survey results. They further study how score values vary with a key contingent factor. Findings The main result of this paper is that the reported importance of critical success factors is contingent on local government population levels. A comparison of importance rankings based on population quartiles shows that ranking orders change, both between quartiles and from the overall ranking, and that certain factors show systematic changes. Further, the authors find that when controlling for sampling error, groups of factors should be considered as equally important. This result holds both for the full sample ranking and for rankings within population quartiles. Originality/value The results of this paper have implications for all survey-based investigations of critical success factors where contingent information on respondents are available. Contingencies need to be taken into consideration, both when assessing rankings according to some criteria and when comparing actual score values.

In light of evidence of low levels of maintenance of public buildings, we investigate trends and determinants of public building conditions in Norwegian local governments. On average, the condition of Norwegian local public facilities have improved slightly in the period 2004-2016. Survey data suggest substantial fluctuations in building conditions and a negative relationship between building conditions in 2004 and 2016. A driver behind this result is high investments in local governments with poor building conditions in 2004. Further, we find no systematic relationship between the conditions in 2004 and maintenance expenditures in subsequent years. We conclude that if maintenance levels are too low, investment levels may be too high. Generally, our results hint at an unhealthy balance between maintenance spending and public spending. Finally, we find that both political and fiscal factors are important in explaining building conditions.

Purpose – The purpose of the paper is to analyze the decision to postpone maintenance expenditures in regional governments using a game-theoretical approach and investigate whether there may be rational reasons for regional governments to carry a maintenance backlog. Design/methodology/approach – A theoretical political economy model, originally used to explain fiscal deficits in regional governments, is revisited and used to explain maintenance backlogs. Findings – It can be fully rational for regional governments to carry maintenance backlogs, given that they expect the central government to “bail out” this backlog, e.g. through an extra grant earmarked for upgrading of facilities. Hence, a balanced budget regulation (BBR) demanding fiscal balance in regional governments is not sufficient to avoid bailouts. The results suggest that the central government should consider including maintenance of facilities in formal BBRs. Originality/value – The paper is relevant for policy makers, as it can give guidance with respect to the design of BBRs. The paper illustrates that regulations that only take fiscal balance into account are too narrow to secure that bailouts are avoided. The reason is that regional governments can strategically use maintenance backlogs to generate bailouts even when regional government borrowing is abolished. To avoid this, the central government could make the regulations more extensive, and also include demands regarding maintenance in the regulations.