IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

Real Determinants of Corporate Leverage

  • Alan J. Auerbach

The U.S. corporate tax distorts the behavior of both real and financial decisions. With respect to the former, the variation in depreciation allowances and investment tax credit provisions across types of investments leads to widely vazying effective tax rates, especially since 1981. Financial policy is distorted by the differential treatment of debt and equity. The purpose of this paper is to examine, using firm-level panel data, the relationship between real and financial decisions by corporations, in part to determine the extent to which these biases off set or reinforce each other.Our results are tentative and suggest that patterns of real and financial behavior are only partially consistent with predictions of various capital structure models (e.g. bankruptcy/agency cost, limited taxshield)and that there is no obvious offset on the financial side to the tax bias against investment in structures.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 1151.

in new window

Date of creation: Jun 1983
Date of revision:
Publication status: published as Auerbach, Alan J. "Real Determinants of Corporate Leverage." Corporate Capital Structure in the U.S., edited by B. M. Friedman. Chicago: Universityof Chicago Press, (1985), pp. 301-322.
Handle: RePEc:nbr:nberwo:1151
Note: ME
Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Phone: 617-868-3900
Web page:

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Black, Fischer & Scholes, Myron S, 1973. "The Pricing of Options and Corporate Liabilities," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 637-54, May-June.
  2. Auerbach, Alan J, 1979. "Wealth Maximization and the Cost of Capital," The Quarterly Journal of Economics, MIT Press, vol. 93(3), pages 433-46, August.
  3. DeAngelo, Harry & Masulis, Ronald W., 1980. "Optimal capital structure under corporate and personal taxation," Journal of Financial Economics, Elsevier, vol. 8(1), pages 3-29, March.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:1151. 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: ()

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.