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Taxation and Corporate Financial Policy

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Alan J. Auerbach

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Abstract

This paper reviews the theory and evidence regarding the impact of taxation on corporate financial policy. Starting from a basic characterization of the classical corporate income tax and its effects, the analysis focuses on three areas of research: equity policy, debt-equity decisions, and choices regarding ownership structure and organizational form. The discussion stresses the distinction between nominal and more fundamental financial differences for example, in the relationship between borrowing and leasing and that financial policy involves choices not only among different underlying policies but also among characterizations of a given policy. The final section offers some brief reflections on the implications of continuing financial innovation.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8203.

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Date of creation: Apr 2001
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Handle: RePEc:nbr:nberwo:8203

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Find related papers by JEL classification:
H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
G30 - Financial Economics - - Corporate Finance and Governance - - - General

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References listed on IDEAS
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