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Taxation and the Firm's Leverage Decision : A Survey of Theoretical Issues


  • Jan Bartholdy
  • Gordon Fisher
  • Jack Mintz


This survey outlines various models used to analyze the impact of taxation on the firm's leverage decision. The models incorporate: i) differential taxation of household from a progressive tax system; ii) loss offsetting under the corporate tax; iii) managerial incentive to avoid moral hazard; iv) bankruptcy; and v) asymmetric information between inside and outside investors. The theory is applied to the Canadian tax system.

Suggested Citation

  • Jan Bartholdy & Gordon Fisher & Jack Mintz, 1986. "Taxation and the Firm's Leverage Decision : A Survey of Theoretical Issues," Working Paper 674, Economics Department, Queen's University.
  • Handle: RePEc:qed:wpaper:674

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    Cited by:

    1. Poitevin, Michel, 1989. "Information et marchés financiers : une revue de littérature," L'Actualité Economique, Société Canadienne de Science Economique, vol. 65(4), pages 555-589, décembre.

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