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Taxation and corporate financial policy

In: Handbook of Public Economics

  • Auerbach, Alan J.

This chapter reviews the theory and evidence regarding the impact of taxation on corporate financial policy. Starting from a basic characterization of the classical corporate income tax and its effects, the analysis focuses on three areas of research: equity policy, debt-equity decisions, and choices regarding ownership structure and organizational form. The discussion stresses the distinction between nominal and more fundamental financial differences -- for example, in the relationship between borrowing and leasing -- and that financial policy involves choices not only among different underlying policies but also among characterizations of a given policy. The final section offers some brief reflections on the implications of continuing financial innovation.

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This chapter was published in:
  • A. J. Auerbach & M. Feldstein (ed.), 2002. "Handbook of Public Economics," Handbook of Public Economics, Elsevier, edition 1, volume 3, number 3.
  • This item is provided by Elsevier in its series Handbook of Public Economics with number 3-19.
    Handle: RePEc:eee:pubchp:3-19
    Contact details of provider: Web page: http://www.elsevier.com/wps/find/bookseriesdescription.cws_home/BS_HE/description

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