Capital Structure Choice and Company Taxation: A Meta-Study

By Lars P. Feld, Jost H. Heckemeyer, Michael Overesch. Social Science Research Network, 2013

196 citations recorded by the source corpus.

This paper provides a quantitative review of the empirical literature on the tax impact on corporate debt financing. Synthesizing the evidence from 46 previous studies, we find that this impact is substantial. In particular, the tax rate proxy determines the outcome of primary analyses. Measures like the simulated marginal tax rate (Graham (1996a)) avoid a downward bias in estimates for the debt response to tax. Moreover, debt characteristics, econometric specifications, and the set of control-variables affect tax effects. Accounting for misspecification biases by means of meta-regressions, we predict a marginal tax effect on the debt ratio of 0.3.

Subfields: Accounting, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/cf897a79cedff6602d87061dbf9504a1011c5cbe

Citations in the corpus

• Multinationals' Profit Response to Tax Differentials: Effect Size and Shifting Channels (2017, unknown): “6 Following a standard convention in the meta-analysis literature (e.g. Disdier and Head, 2008; Havranek and Irsova, 2011; Feld et al., 2013), we try to sample all tax effect estimates reported in these studies.6 Discarding information would be inefficient.”