.  This paper reviews and summarises the results of selected studies on performance gaps between multinational enterprises and their domestic counterparts. Performance gaps arise in such fields as productivity, technology, profitability, wages, skills and growth. While these gaps are often attributed to foreign ownership of the affiliates, the theory of the Multinational Enterprise argues that these gaps are due to being a Multinational rather than the nationality of the firm. Empirical evidence on the existence of performance gaps between foreign and domestic firms is supportive of this view: foreign ownership turns out to be a much less important explanatory factor than normally assumed. Firm‐specific assets and firm characteristics like industry, size, parent country and multinationality per se are more important. Such results are broadly consistent with those derived in the literatures on ownership change, on foreign entry and on spillovers. We conclude that there is little case for foreign direct investment promotion policies to discriminate between firms on the basis of ownership.

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte.

In line with previous literature, we find that strict employment protection deters foreign direct investment. This finding is consistent with the view that rigid labour markets result in high adjustment and exit costs which discourage firm investment. Moreover, our results are consistent with the view that the deterrent effect of rigid labour markets depends on the skill intensity of an industry.

This paper explores the impact dividend taxes exert on the dividends repatriated from foreign affiliates to their German parent company. Based on an augmented Lintner model of firms' dividend payout decisions, the paper focusses on cross-border intra-firm dividend payments of wholly-owned foreign affiliates in the manufacturing sector. Firm-level data from the Microdatabase Direct Investment (MiDi) of the Deutsche Bundesbank is used. Results firstly signal the validity of the original Lintner model for cross-border intra-firm dividend payments of German affiliates abroad, although the target payout ratio and the degree of dividend smoothing drops substantially once timeinvariant unobserved heterogeneity is controlled for. Secondly, results from an augmented Lintner model imply that increases in dividend taxes indeed have a statistically significant negative impact on the expected value of dividends repatriated: Evaluated at the overall mean dividend payment a one percentage point increase in the dividend tax rate would decrease dividends repatriated by about 3.5 percent. Evaluated at the mean of positive dividend payments a semi-elasticity of -1.6 is derived.Keywords: Dividend Policy, Taxes, Lintner Model, Multinational Enterprise JEL codes: G35, H25 Non technical summaryThe aim of this study is to analyse whether dividend taxes exert a statistically and economically relevant impact on the expected value of dividends repatriated from foreign affiliates to their German parent company over the 1999-2005 period. The paper contributes to the literature as evidence on the impact dividend taxes have on cross-border intra-firm dividend payments is rather scarce. This is especially the case for countries applying the exemption system in international taxation, like Germany. The analysis is based on data provided by the Deutsche Bundesbank's Microdatabase Direct Investment (MiDi) database. Specifically, data on German foreign affiliates in the manufacturing sector which are directly and whollyowned by a German parent company is used for the analysis. Host countries included are the EU member countries (as of 2007) and the most advanced Non-EU OECD countries. In total, information contained in yearly data on 587 German affiliates abroad over 7 years is explored. The analysis is based on the widely known Lintner model of dividend smoothing, which is frequently seen as a relevant description of firms' dividend payout behavior. The Lintner model is a partial adjustment model suggesting that firms have a target dividend payment, which is a fraction of its current earnings. The model leads to an empirical specification relating dividends paid to lagged dividends and current earnings of the firm. However, the basic Lintner model has been established for dividend payments to public shareholders, but not the intra-firm case and moreover it does not include taxes as determinants of dividend payments. Thus, two issues prior to exploring the tax effect within the Lintner framework arise: (i) it has to be established that the...