NDLI: Taxes, Governance, and Debt Maturity Structure: International Evidence

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Taxes, Governance, and Debt Maturity Structure: International Evidence

Content Provider	Scilit
Author	Kashefi-Pour, Eilnaz Lasfer, Meziane
Copyright Year	2018
Description	Journal: SSRN Electronic Journal We provide a cross-country evidence on the impact of corporate and personal income taxes, and corporate governance systems on debt maturity structures and leverage using a comprehensive sample of 212,642 firm-year observations based on a sample of 19,573 firms from 24 OECD countries over the period 1990 to 2015. We find longer debt maturities, higher leverage, and, in a dynamic setting, a greater propensity to decrease short-term debt, in countries with high investor protection and where the potentials for debt tax shields and after-tax return of investors are high. Our results imply that when investors are protected, firms tend to have optimal debt maturities to maximize the gains from tax shields and minimize the tax cost of equity. In contrast, in low protection countries, investors prefer their firms to opt for low debt that is mainly short-term to mitigate the risk-shifting and debt overhang problems even if this entails forgoing the debt tax shields. Our results hold for various robustness checks including the hierarchical linear model specification, which corrects for a number of OLS biases.
Related Links	http://pure-oai.bham.ac.uk/ws/files/42837166/Market_Quotation_and_Debt_Maturity_Structur_full_paper.pdf https://papers.ssrn.com/sol3/Delivery.cfm?abstractid=3262779
ISSN	10914358
e-ISSN	15565068
DOI	10.2139/ssrn.3262779
Journal	SSRN Electronic Journal
Language	English
Publisher	Elsevier BV
Publisher Date	2018-10-07
Access Restriction	Open
Subject Keyword	Journal: SSRN Electronic Journal Classical and Imputation Tax Systems
Content Type	Text
Resource Type	Article
Subject	Public Health, Environmental and Occupational Health Psychiatry and Mental Health

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