|
| Título : |
Capital structure and taxes : what happens when you (also) subsidize equity? |
| Tipo de documento: |
documento electrónico |
| Autores: |
Frédéric Panier, Autor ; Francisco Pérez González, Autor ; Pablo Villanueva, Autor |
| Fecha de publicación: |
Oct. 2012 |
| Número de páginas: |
47 p. |
| Il.: |
gráf., tablas |
| Dimensiones: |
30 cm |
| Nota general: |
Trabajo premiado en el V Premio "Jaime Fernández de Araoz" sobre Corporate Finance (2013), patrocinado por Deutsche Bank, CUNEF, Caixabank y Universia |
| Idioma : |
Inglés (eng) |
| Materias: |
Finanzas empresariales
|
| Clasificación: |
658.14 Financiación. Financiación de las empresas. Obtención de capital |
| Resumen: |
This paper shows that capital structure significantly responds to changing tax incentives. To identify the effect of taxes, we exploit the introduction of a novel tax provision (the notional interest deduction, or NID) as an arguably exogenous source of variation to the cost of using equity financing. The NID, introduced in Belgium in 2006, drastically reduces the tax-driven distortions that favor the use of debt financing by allowing firms to deduct from their taxable income a notional interest charge that is a function of equity. Our main findings are four. First, the NID led to a significant increase in the share of equity in the capital structure. Second, both incumbent and new firms increase their equity ratios after the NID is introduced. Third, the largest responses to these changing tax incentives are found among large and new firms. Fourth, the increase in equity ratios is explained by higher equity levels and not by a reduction in other liabilities. The results are robust to using data from neighboring countries as a control group, as well as, relying on a battery of tests aimed at isolating the effect of other potential confounding variables. Overall, the evidence demonstrates that tax policies designed to encourage the use of equity financing are likely to lead to more capitalized firms. |
| Nota de contenido: |
Bibliografía. |
| Link: |
https://biblioteca.cunef.edu/gestion/catalogo/index.php?lvl=notice_display&id=12148 |
Capital structure and taxes : what happens when you (also) subsidize equity? [documento electrónico] / Frédéric Panier, Autor ; Francisco Pérez González, Autor ; Pablo Villanueva, Autor . - Oct. 2012 . - 47 p. : gráf., tablas ; 30 cm. Trabajo premiado en el V Premio "Jaime Fernández de Araoz" sobre Corporate Finance (2013), patrocinado por Deutsche Bank, CUNEF, Caixabank y Universia Idioma : Inglés ( eng)
| Materias: |
Finanzas empresariales
|
| Clasificación: |
658.14 Financiación. Financiación de las empresas. Obtención de capital |
| Resumen: |
This paper shows that capital structure significantly responds to changing tax incentives. To identify the effect of taxes, we exploit the introduction of a novel tax provision (the notional interest deduction, or NID) as an arguably exogenous source of variation to the cost of using equity financing. The NID, introduced in Belgium in 2006, drastically reduces the tax-driven distortions that favor the use of debt financing by allowing firms to deduct from their taxable income a notional interest charge that is a function of equity. Our main findings are four. First, the NID led to a significant increase in the share of equity in the capital structure. Second, both incumbent and new firms increase their equity ratios after the NID is introduced. Third, the largest responses to these changing tax incentives are found among large and new firms. Fourth, the increase in equity ratios is explained by higher equity levels and not by a reduction in other liabilities. The results are robust to using data from neighboring countries as a control group, as well as, relying on a battery of tests aimed at isolating the effect of other potential confounding variables. Overall, the evidence demonstrates that tax policies designed to encourage the use of equity financing are likely to lead to more capitalized firms. |
| Nota de contenido: |
Bibliografía. |
| Link: |
https://biblioteca.cunef.edu/gestion/catalogo/index.php?lvl=notice_display&id=12148 |
|
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