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How do taxes affect investment when firms face financial constraints ?
| Content Provider | Semantic Scholar |
|---|---|
| Author | Simmler, M. Christine |
| Copyright Year | 2012 |
| Abstract | This study uses a switching regression framework with known sample separation to analyze the effects of corporate income taxation on investment in case of binding and nonbinding financial constraints. By employing two different sample splitting criteria, payout behavior and the ratio of liabilities to total assets, I show that the elasticity of capital to its user costs in an auto-distributed-lag model is underestimated in case of neglecting the presence of financial constraints. For unconstrained firms, the elasticity of capital to its user costs is around -1. For financially constrained firms the elasticity is statistically not different from zero. For the latter group instead, the results prevail by using the effective average tax rate to measure liquidity outflow through taxation that corporate taxation affects investment through changing internal finance. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | https://www.econstor.eu/bitstream/10419/61396/1/72225394X.pdf |
| Language | English |
| Access Restriction | Open |
| Subject Keyword | Arabic numeral 0 Distributed lag Elasticity (cloud computing) Elasticity (data store) Financial cost Taxes |
| Content Type | Text |
| Resource Type | Article |
