Corporate tax, capital structure, and the accessibility of bank loans: Evidence from China

By Liansheng Wu, Heng Yue. 2009

112 citations recorded by the source corpus.

In this paper, we investigate whether listed firms in China adjust their capital structure in response to an increase in the corporate tax rate. Although theories of capital structure suggest that corporate tax is an important determinant of capital structure, how exogenous changes of the tax rate affect firms' leverage decisions has not been fully explored. We examine a unique circumstance in which the Chinese government increased the corporate tax rate of firms that had previously received local government tax rebates. The evidence indicates that these firms increased their leverage when the corporate tax rate increased. Further investigation suggests that the adjustment of leverage was mostly driven by firms with a high level of access to bank loans.

Subfields: Accounting

View Paper: https://www.semanticscholar.org/paper/a3cb932d09fcee63ae56ae7dc180ada5d5adda3c

How researchers see this paper

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In Accounting

1. Gary Gang Tian
2. Chen Lin
3. Michael Firth
4. Shiguang Ma
5. W. Ruan
6. Sonia M. L. Wong
7. X. Vo
8. Ping Liu

Citations in the corpus

• Inside the Black Box: Bank Credit Allocation in China’s Private Sector (2009, result): “Our findings add to the recent literature on the structure, performance and functioning of China’s banking sector (e.g. Berger, Hasan and Zou, 2009; Ferri, 2009; Fu and Heffernan, 2009; Lin and Zhang, 2009; Wu and Yue, 2009; Jia, 2009).”
• Determinants of capital structure in emerging markets: evidence from Vietnam (2017, background): “There are an increasing number of papers focusing on the capital structure decision in China (Chen 2004; Chen & Strange 2005; Huang & Song 2006; Li et al. 2009; Qian et al. 2009; Wu & Yue 2009).”
• Managerial Ownership, Capital Structure and Firm Value: Evidence from China’s Civilian-run Firms (2011, background): “Conversely, however, this may reflect the institutional and corporategovernance environment in China, where the relationship between managerial ownership, capital structure and firm value is more complicated than in developed markets.”