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Effects of ultimate ownership structure and corporate tax on capital structures: Evidence from Taiwan

  • Lee, Cheng-Few
  • Kuo, Nan-Ting
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    Our study investigates how ultimate ownership structure and the corporate tax rate affect the equilibrium trade-off relation between manager ownership and debt in reducing agency costs. Considering the presence of the controlling shareholder, we find that higher corporate tax rates strengthen the trade-off relation between manager ownership and debt while higher control rights held by the controlling shareholder weaken it as well as the strengthening effect of corporate tax rate. Our study contributes to the literature by revealing tax and ultimate ownership structure dimensions and their interactions as additional determinants of corporate capital structure.

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    File URL: http://www.sciencedirect.com/science/article/pii/S1059056013000671
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    Article provided by Elsevier in its journal International Review of Economics & Finance.

    Volume (Year): 29 (2014)
    Issue (Month): C ()
    Pages: 409-425

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    Handle: RePEc:eee:reveco:v:29:y:2014:i:c:p:409-425
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/620165

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