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Corporate tax aggressiveness, outside directors, and debt policy: An empirical analysis

  • Richardson, Grant
  • Lanis, Roman
  • Leung, Sidney Chi-Moon
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    This study examines the influence of corporate tax aggressiveness on corporate debt policy (the debt-substitution effect) and the influence of outside directors on both debt and the debt-substitution effect. Based on a sample of 6967 firm-year observations over the 2001–2010 period, we find that tax aggressiveness is negatively correlated with debt. We also observe a negative correlation between debt and the proportion of outside directors on the board, and find that outside directors magnify the debt-substitution effect. Finally, we obtain similar results in analysis based on firms' debt issuance decisions.

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    File URL: http://www.sciencedirect.com/science/article/pii/S092911991300117X
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    Article provided by Elsevier in its journal Journal of Corporate Finance.

    Volume (Year): 25 (2014)
    Issue (Month): C ()
    Pages: 107-121

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    Handle: RePEc:eee:corfin:v:25:y:2014:i:c:p:107-121
    Contact details of provider: Web page: http://www.elsevier.com/locate/jcorpfin

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