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Corporate tax aggressiveness and the maturity structure of debt

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  • Kubick, Thomas R.
  • Lockhart, G. Brandon

Abstract

We investigate the association between tax aggressiveness and corporate debt maturity, and we find strong evidence that shorter debt maturity is more prevalent for tax aggressive firms. The results survive numerous robustness tests, including controlling for compensation-induced incentives for risk-taking, firm and CEO effects, changes regressions, and instrumental variables estimation. The results suggest that lenders view tax aggressiveness as a risky activity and therefore restrict the maturity structure of debt to provide a monitoring mechanism for debt contracts with tax-aggressive borrowers. We conclude that tax aggressiveness has a meaningful influence on debt contracting.

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  • Kubick, Thomas R. & Lockhart, G. Brandon, 2017. "Corporate tax aggressiveness and the maturity structure of debt," Advances in accounting, Elsevier, vol. 36(C), pages 50-57.
    • Handle: RePEc:eee:advacc:v:36:y:2017:i:c:p:50-57
    DOI: 10.1016/j.adiac.2016.10.001
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    Cited by:

    1. Li, John, 2022. "The effect of employee satisfaction on effective corporate tax planning: Evidence from Glassdoor," Advances in accounting, Elsevier, vol. 57(C).
    2. Zhou, Fuzhao & Shao, Pei & Xie, Feixue & Huang, Jianning, 2023. "The governance role of lender monitoring: Evidence from Borrowers' tax planning," Advances in accounting, Elsevier, vol. 63(C).
    3. Jie Sun & Lewis Makosa & Jinkun Yang & Fangyuan Yin & Lovemore Sitsha, 2023. "Does corporate tax planning mitigate financial constraints? Evidence from China," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 510-527, January.
    4. Wu, Julia Yonghua & Opare, Solomon & Bhuiyan, Md. Borhan Uddin & Habib, Ahsan, 2022. "Determinants and consequences of debt maturity structure: A systematic review of the international literature," International Review of Financial Analysis, Elsevier, vol. 84(C).

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    More about this item

    Keywords

    Tax aggressiveness; Tax sheltering; Debt maturity; Leverage; Agency costs of debt;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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