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Taxation and Capital Structure Choice: The Role of Ownership

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  • Robert Krämer

Abstract

Applying firm fixed-effects estimations to European firm-level data, I analyze how ownership structure affects the relationship between taxation and capital structure. I find that an increase in the corporate tax rate affects the debt-to-assets ratio positively, and that this effect is stronger for firms with concentrated ownership. These results hold independently of whether firms are standalone or subsidiaries, and are also valid if subsidiaries are divided into those that are foreign-owned and those domestically owned. Lastly, ownership plays a role even when controlling for other potentially important determinants of the relation between corporate taxation and capital structure.

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  • Robert Krämer, 2015. "Taxation and Capital Structure Choice: The Role of Ownership," Scandinavian Journal of Economics, Wiley Blackwell, vol. 117(3), pages 957-982, July.
    • Handle: RePEc:bla:scandj:v:117:y:2015:i:3:p:957-982
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    File URL: http://hdl.handle.net/10.1111/sjoe.12107
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    Cited by:

    1. Fossen, Frank M. & Simmler, Martin, 2016. "Personal Taxation of Capital Income and the Financial Leverage of Firms," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 23(1), pages 48-81.
    2. Silke Rünger & Rainer Niemann & Magdalena Haring, 2019. "Investor taxation, firm heterogeneity and capital structure choice," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(4), pages 719-757, August.

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