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Does Taxation Stifle Corporate Investment? Firm‐Level Evidence from ASEAN Countries

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  • Serhan Cevik
  • Fedor Miryugin

Abstract

This article conducts a firm‐level analysis of the effect of taxation on corporate investment, using large‐scale panel data on non‐financial firms over the period 1990–2014, and controlling for macrostructural differences among ASEAN countries. We find a significant degree of persistence in fixed investment over time, which varies with firm characteristics, such as size, growth prospects, profitability and leverage. The non‐linear estimations indicate that taxation facilitates business investment (possibly by enabling public investment in infrastructure and human capital, and the proper functioning of government institutions), but this effect turns negative and stifles private investment growth as the tax burden increases.

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  • Serhan Cevik & Fedor Miryugin, 2018. "Does Taxation Stifle Corporate Investment? Firm‐Level Evidence from ASEAN Countries," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 51(3), pages 351-367, September.
    • Handle: RePEc:bla:ausecr:v:51:y:2018:i:3:p:351-367
    DOI: 10.1111/1467-8462.12267
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