The DOI matches its Crossref record; 4 of the 4 references it cites were found in a registry or an index.
Taxes and Capital Structure: Evidence from Firms’ Response to the Tax Reform Act of 1986
Abstract
While the theoretical relation between taxes and capital structure has been extensively analyzed, the empirical evidence on this issue has thus far been inconclusive. One of the main difficulties confronting previous empirical studies of the cross-sectional relationship between taxes and leverage was the control of intervening variables. The Tax Reform Act of 1986 (TRA), which drastically changed the tax regime, provides a unique opportunity to assess the interaction between taxes and leverage decisions in a controlled environment. We test the relationship between leverage and certain tax-related variables for a large sample of companies in the years surrounding the enactment of the TRA. The results support the tax-based theories of capital structure. The findings indicate that there exists a substitution effect between debt and nondebt tax shields, and that both corporate and personal tax rates affect leverage decisions.
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Citations
Cites
Corporate financing and investment decisions when firms have information that investors do not have
Myers, S. C., & Majluf, N. S. (1984) · Journal of Financial Economics · doi:10.1016/0304-405x(84)90023-0 · Cited by 18,957
Determinants of corporate borrowing
Myers, S. C. (1977) · Journal of Financial Economics · doi:10.1016/0304-405x(77)90015-0 · Cited by 13,169
The Determinants of Capital Structure Choice
TITMAN, S., & WESSELS, R. (1988) · The Journal of Finance · doi:10.1111/j.1540-6261.1988.tb02585.x · Cited by 6,112
Miller, M. H. (1977) · The Journal of Finance · doi:10.1111/j.1540-6261.1977.tb03267.x · Cited by 2,898
Cited by
Debt, Leases, Taxes, and the Endogeneity of Corporate Tax Status
Graham, J. R., Lemmon, M. L., & Schallheim, J. S. (1998) · The Journal of Finance · doi:10.1111/0022-1082.55404 · Cited by 594
Managerial Conservatism, Project Choice, and Debt
Hirshleifer, D., & Thakor, A. V. (1992) · Review of Financial Studies · doi:10.1093/rfs/5.3.437 · Cited by 555
Trade-Off and Pecking Order Theories of Debt
Frank, M. Z., & Goyal, V. K. (2007) · SSRN Electronic Journal · doi:10.2139/ssrn.670543 · Cited by 455
Metadata
- Authors
- Givoly, D., Hayn, C., Ofer, A. R., & Sarig, O.
- Venue
- Review of Financial Studies
- Publisher
- Oxford University Press (OUP)
- Published
- 1992-04
- Volume
- 5
- Issue
- 2
- Pages
- 331-355
- ISSN
- 0893-9454 (ISSN-L)
- 1465-7368
- OpenAlex
- W1964624058
- Cited by
- 236
- References
- 4
- FWCI
- 32.02
- Type
- journal article
- Language
- en
- Open access
- closed
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- Givoly, D., Hayn, C., Ofer, A. R., & Sarig, O. (1992). Taxes and Capital Structure: Evidence from Firms’ Response to the Tax Reform Act of 1986. Review of Financial Studies. https://doi.org/10.1093/rfs/5.2.331
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