Capital structure choice and company taxation: A meta-study |
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Authors: | Lars P. Feld Jost H. Heckemeyer Michael Overesch |
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Affiliation: | 1. University of Freiburg, Walter Eucken Institute, Goethestrasse 10, 79100 Freiburg, Germany;2. University of Mannheim, Business School, Schloss, 68131 Mannheim, Germany;3. University of Cologne, Department of Management and Economics, Albertus Magnus Platz, 50923 Cologne, Germany |
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Abstract: | This paper provides a quantitative review of the empirical literature on the tax impact on corporate debt financing. Synthesizing the evidence from 48 previous studies, we find that this impact is substantial. In particular, the tax rate proxy determines the outcome of primary analyses. Measures like the simulated marginal tax rate (Graham, 1996) avoid a downward bias in estimates for the debt response to tax. Moreover, econometric specifications and the set of control-variables affect tax effects. Accounting for misspecification biases by means of meta-regressions, we predict a marginal tax effect on the debt ratio of about 0.27. |
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Keywords: | G30 H32 F23 |
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