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Corporate Taxes and Firms Performance: Evidence from an Emerging Economy

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  • A. M. Iregui-Bohórquez
  • L. A. Melo-Becerra
  • A. J. Orozco-Gallo

Abstract

Corporate taxes play an important role in a firm’s decision-making as they are part of the cost of capital. Thus, understanding the effect of taxes on the performance of firms in the context of frequent tax reforms, as is the case of Colombia, is of great relevance. We used the meta-frontier stochastic techniques, which allow us to estimate in two steps the technical efficiency of firms within each economic sector and between economic sectors in relation to the set of firms in the country. Then, using quantile regression analysis, we estimate both the effect of corporate taxation on firm performance as well as the effect of efficiency on firms’ tax payments. Results indicate that firms in some economic sectors could be benefiting from better production conditions, and that the most efficient firms.

Suggested Citation

  • A. M. Iregui-Bohórquez & L. A. Melo-Becerra & A. J. Orozco-Gallo, 2022. "Corporate Taxes and Firms Performance: Evidence from an Emerging Economy," Revista de Economía del Rosario, Universidad del Rosario, vol. 25(1), June.
    • Handle: RePEc:col:000151:020280
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    References listed on IDEAS

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    1. Norman Gemmell & Richard Kneller & Danny McGowan & Ismael Sanz & José F. Sanz‐Sanz, 2018. "Corporate Taxation and Productivity Catch‐Up: Evidence from European Firms," Scandinavian Journal of Economics, Wiley Blackwell, vol. 120(2), pages 372-399, April.
    2. Sarah Perret & Bert Brys, 2015. "Taxation and Investment in Colombia," OECD Economics Department Working Papers 1204, OECD Publishing.
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    More about this item

    Keywords

    Corporate taxes; stochastic frontier analysis; firm performance;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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