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On the Italian ACE and its impact on enterprise performance: a PLS-path modeling analysis


  • Simona Balzano

    (University of Cassino, Department of Economics)

  • Filippo Oropallo


  • Valentino Parisi

    () (University of Cassino, Department of Economics)


In 1998 Italy introduced a restricted version of an Allowance for Corporate Equity, called Dual Income Tax. Using data integrating Italy’s Institute for Statistics enterprise survey data and company accounts, we explore the effects of the Dual Income Tax on enterprise performance in 1998-2001. Firms benefiting from this allowance are simulated through the DIECOFIS corporate tax microsimulation model. The method to estimate enterprise performance is based on a structural equation model which allows us to compute a composite indicator given specific factors observed from enterprise activity. We find a positive impact of the Dual Income Tax on enterprise performance in that companies benefiting from this allowance outperformed non-eligible ones.

Suggested Citation

  • Simona Balzano & Filippo Oropallo & Valentino Parisi, 2011. "On the Italian ACE and its impact on enterprise performance: a PLS-path modeling analysis," International Journal of Microsimulation, International Microsimulation Association, vol. 4(2), pages 14-26.
  • Handle: RePEc:ijm:journl:v:4:y:2011:i:2:p:14-26

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    References listed on IDEAS

    1. repec:rtv:ceiswp:216 is not listed on IDEAS
    2. Boadway, Robin & Bruce, Neil, 1984. "A general proposition on the design of a neutral business tax," Journal of Public Economics, Elsevier, vol. 24(2), pages 231-239, July.
    3. Michela Nardo & Michaela Saisana & Andrea Saltelli & Stefano Tarantola & Anders Hoffman & Enrico Giovannini, 2005. "Handbook on Constructing Composite Indicators: Methodology and User Guide," OECD Statistics Working Papers 2005/3, OECD Publishing.
    4. Alexander Klemm, 2007. "Allowances for Corporate Equity in Practice," CESifo Economic Studies, CESifo, vol. 53(2), pages 229-262, June.
    5. Massimo Bordignon & Silvia Giannini & Paolo Panteghini, 2001. "Reforming Business Taxation: Lessons from Italy?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 8(2), pages 191-210, March.
    6. Filippo Oropallo & Valentino Parisi, 2007. "Will Italy’s Tax Reform Reduce the Corporate Tax Burden? A Microsimulation Analysis," Rivista di statistica ufficiale, ISTAT - Italian National Institute of Statistics - (Rome, ITALY), vol. 9(1), pages 31-58, march.
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    Cited by:

    1. repec:ksa:szemle:1738 is not listed on IDEAS
    2. Kayis-Kumar, Ann, 2015. "Thin capitalisation rules: A second-best solution to the cross-border debt bias?," MPRA Paper 72031, University Library of Munich, Germany.

    More about this item


    Allowance for corporate equity; Microsimulation; Enterprise performance; PLS path-modeling; Structural equation model;

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General


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