Journal of Finance Vol. 45 No. 5 1990
Do Taxes Affect Corporate Financing Decisions?
open access
Abstract
A new empirical method and data set are used to study the effects of tax policy on corporate financing choices. Clear evidence emerges that non-debt tax shields "crowd out" interest deductibility, thus decreasing the desirability of debt issues at the margin. Previous studies which failed to find tax effects examined debt-equity ratios rather than individual, well-specified financing choices. This paper also demonstrates the importance of controlling for confounding effects which other papers ignored. Results on other (asymmetric information) effects on financing decisions are also presented.
- DOI
- 10.2307/2328746
- Volume
- 45
- Issue
- 5
- Pages
- 1471
- Sources
- openalex crossref