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Taxation and the Optimal Constraint on Corporate Debt Finance

Birch Sørensen, Peter - 2014

The tax bias in favour of debt finance under the corporate income tax means that corporate debt ratios exceed the socially optimal level. This creates a rationale for thin-capitalization rules limiting the amount of debt that qualifies for interest deductibility. This paper sets up a model of...

Persistent link: https://www.econbiz.de/10013039997

Flexible Prices and Leverage

D'Acunto, Francesco - 2017

The frequency with which firms adjust output prices helps explain persistent differences in capital structure across firms. Unconditionally, the most exible-price firms have a 19% higher long-term leverage ratio than the most sticky-price firms, controlling for known determinants of capital...

Persistent link: https://www.econbiz.de/10012962123

Credit Booms, Debt Overhang and Secular Stagnation

Illing, Gerhard - 2018

Why do advanced economies fall into prolonged periods of economic stagnation, particularly in the aftermath of credit booms? We present a model of persistent aggregate demand shortage based on strong liquidity preferences of households, in which we incorporate financial imperfections to study...

Persistent link: https://www.econbiz.de/10012927578

Debt Recovery in Firm Liquidations : Do Liquidation Trustees Matter?

Cepec, Jaka - 2016

Insolvency systems play a crucial role in protection of creditor rights, yet micro-level empirical evidence on the … functioning of insolvency regimes worldwide is sparse. We investigate whether creditors' recovery of outstanding claims, a measure … of ex-post efficiency of an insolvency regime, depends on the characteristics of the trustee delegated the administration …

Persistent link: https://www.econbiz.de/10012982336

Multinational Capital Structure and Tax Competition

Wrede, Matthias - 2010

This paper analyzes tax competition when welfare maximizing jurisdictions levy source-based corporate taxes and multinational enterprises choose tax-efficient capital-to-debt ratios. Under separate accounting, multinationals shift debt from low-tax to high-tax countries. The Nash equilibrium of...

Persistent link: https://www.econbiz.de/10013143833

The Commitment Role of Equity Financing

Fahn, Matthias - 2014

theory are in line with a number of empirical results, which seem to stay in contrast to existing theories on capital …

Persistent link: https://www.econbiz.de/10013051377

The Impact of Thin Capitalization Rules on the Location of Multinational Firms' Foreign Affiliates

Merlo, Valeria - 2015

This paper examines how restrictions on the tax-deductibility of interest cost affect location choices of multinational corporations (MNCs). Many countries have introduced so-called thin-capitalization rules (TCRs) to prevent MNCs from shifting tax base to countries with lower tax rates. As of...

Persistent link: https://www.econbiz.de/10013018273

Firms' Financial Choices and Thin Capitalization Rules under Corporate Tax Competition

Haufler, Andreas - 2008

Thin capitalization rules have become an important element in the corporate tax systems of developed countries. This paper sets up a model where national and multinational firms choose tax-efficient financial structures and countries compete for multinational firms through statutory tax rates...

Persistent link: https://www.econbiz.de/10012769702

Multinationals, Minority Ownership and Tax-Efficient Financing Structures

Schindler, Dirk - 2013

This paper presents a theory model that simultaneously accounts for the financing decisions and ownership structure in …

Persistent link: https://www.econbiz.de/10013094791

Taxes and the Efficiency Costs of Capital Distortions

Weichenrieder, Alfons J.; Klautke, Tina - 2021

departure from tax neutrality. Against this background, the present paper discusses the theory of capital structure and provides …

Persistent link: https://www.econbiz.de/10013316464