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The Impact of Accounting and Tax Law Concerning Borrowing Costs on the Assessment of the Financial Leverage Effect

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  • Prewysz-Kwinto Piotr

    (WSB University in Torun, Torun, Poland)

Abstract

The aim of this paper is to present the impact of accounting and tax law concerning borrowing costs on the assessment of financial leverage effect. Due to the fact that these legal regulations require, in some cases, the recognition of borrowing costs not in the profit and loss account but in the value of assets, previously used methods for the identification of financial leverage effect do not always allow to draw the correct conclusions. Therefore, the paper proposes the necessary modification.

Suggested Citation

  • Prewysz-Kwinto Piotr, 2018. "The Impact of Accounting and Tax Law Concerning Borrowing Costs on the Assessment of the Financial Leverage Effect," Financial Sciences. Nauki o Finansach, Sciendo, vol. 23(2), pages 47-59, June.
    • Handle: RePEc:vrs:finsci:v:23:y:2018:i:2:p:47-59:n:4
    DOI: 10.15611/fins.2018.2.04
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    More about this item

    Keywords

    financial leverage effect; borrowing costs; profitability; accounting law; tax law; IAS/IFRS;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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