Taxation and Corporate Use of Debt: Implications for Tax Policy
There is growing empirical evidence showing that taxes encourage use of debt in large profitable firms and discourage it in less profitable firms. There has been debate, though, on the source of any non-tax costs from debt finance offsetting the tax advantages of debt. This paper lays out competing hypotheses, notes that the existing empirical evidence is more supportive of a “lemons” model in which lack of information about the viability of borrowing firms inhibits use of debt, and then explores how tax policy should be designed in response.
Volume (Year): 63 (2010)
Issue (Month): 1 (March)
|Contact details of provider:|| Postal: 529 14th Street NW Suite 750, Washington DC 20045|
Web page: https://www.ntanet.org/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:ntj:journl:v:63:y:2010:i:1:p:151-74. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ann Crampton)
If references are entirely missing, you can add them using this form.