Taxation and Capital Structure Choice: The Role of Ownership |
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Authors: | Robert Krämer |
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Institution: | European Commission, Brussels, BelgiumThis paper was prepared before the author joined the European Commission. It should not be reported as representing the views of the European Commission. |
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Abstract: | Applying firm fixed‐effects estimations to European firm‐level data, I analyze how ownership structure affects the relationship between taxation and capital structure. I find that an increase in the corporate tax rate affects the debt‐to‐assets ratio positively, and that this effect is stronger for firms with concentrated ownership. These results hold independently of whether firms are standalone or subsidiaries, and are also valid if subsidiaries are divided into those that are foreign‐owned and those domestically owned. Lastly, ownership plays a role even when controlling for other potentially important determinants of the relation between corporate taxation and capital structure. |
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Keywords: | Corporate finance corporate taxation firm heterogeneity G32 H24 H25 |
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