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A Model to Measure the Effects of Taxes on the Real and Financial Decisions of the Firm

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  • Nadeau, Serge J.

Abstract

Presents a model for the analysis of the joint effects of taxation on the real and financial decisions of the firm. Shows that linking the real and financial decisions helps explain corporate investment behavior and that personal income taxation affects corporate investment through its effect on dividend payout.

Suggested Citation

  • Nadeau, Serge J., 1988. "A Model to Measure the Effects of Taxes on the Real and Financial Decisions of the Firm," National Tax Journal, National Tax Association;National Tax Journal, vol. 41(4), pages 467-481, December.
    • Handle: RePEc:ntj:journl:v:41:y:1988:i:4:p:467-81
    DOI: 10.1086/NTJ41788754
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    References listed on IDEAS

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    1. Auerbach, Alan J, 1983. "Taxation, Corporate Financial Policy and the Cost of Capital," Journal of Economic Literature, American Economic Association, vol. 21(3), pages 905-940, September.
    2. Litzenberger, Robert H & Van Horne, James C, 1978. "Elimination of the Double Taxation of Dividends and Corporate Financial Policy," Journal of Finance, American Finance Association, vol. 33(3), pages 737-750, June.
    3. Bradford, David F., 1981. "The incidence and allocation effects of a tax on corporate distributions," Journal of Public Economics, Elsevier, vol. 15(1), pages 1-22, February.
    4. Auerbach, Alan J., 1984. "Taxes, firm financial policy and the cost of capital: An empirical analysis," Journal of Public Economics, Elsevier, vol. 23(1-2), pages 27-57.
    5. M. S. Feldstein, 1970. "Corporate Taxation and Dividend Behaviour," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 37(1), pages 57-72.
    6. J. Gregory Ballentine & Charles E. McLure, Jr., 1980. "Taxation and Corporate Financial Policy," NBER Working Papers 0243, National Bureau of Economic Research, Inc.
    7. J. Gregory Ballentine & Charles E. McLure, 1980. "Taxation and Corporate Financial Policy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 94(2), pages 351-372.
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    Cited by:

    1. Zodrow, George R., 1991. "On the 'Traditional' and 'New' Views of Dividend Taxation," National Tax Journal, National Tax Association, vol. 44(4), pages 497-509, December.
    2. Chemla, Gilles & Hennessy, Christopher, 2019. "Equilibrium Counterfactuals," CEPR Discussion Papers 14146, C.E.P.R. Discussion Papers.
    3. Gilles Chemla & Christopher Hennessy, 2021. "Equilibrium Counterfactuals," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(2), pages 639-669, May.
    4. Steve Bond & Lucy Chennells & Michael Devereux, 1995. "Company dividends and taxes in the UK," Fiscal Studies, Institute for Fiscal Studies, vol. 16(3), pages 1-18, August.
    5. Nadeau, Serge J. & Strauss, Robert P., 1993. "Taxation, Equity, and Growth: Exploring the Trade-Off Between Shareholder Dividend Tax Relief and Higher Corporate Income Taxes," National Tax Journal, National Tax Association, vol. 46(2), pages 161-75, June.
    6. Zodrow, George R., 1991. "On the 'Traditional' and 'New' Views of Dividend Taxation," National Tax Journal, National Tax Association;National Tax Journal, vol. 44(4), pages 497-509, December.
    7. Grubert, Harry & Mutti, John, 1994. "International Aspects of Corporate Tax Integration: The Contrasting Role of Debt and Equity Flows," National Tax Journal, National Tax Association;National Tax Journal, vol. 47(1), pages 111-133, March.
    8. Nadeau, Serge J. & Strauss, Robert P., 1993. "Taxation, Equity, and Growth: Exploring the Trade-Off Between Shareholder Dividend Tax Relief and Higher Corporate Income Taxes," National Tax Journal, National Tax Association;National Tax Journal, vol. 46(2), pages 161-175, June.
    9. Gary, Robert F. & Moore, Jared A. & Sisneros, Craig A. & Terando, William D., 2016. "The impact of tax rate changes on intercorporate investment," Advances in accounting, Elsevier, vol. 34(C), pages 55-63.

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