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Corporate tax incentives and capital structure: New evidence from UK firm-level tax returns

Abstract:

We investigate how companies’ capital structure is affected by corporate income taxes using confidential company-level tax returns for a large sample of UK firms. Exploiting variation in companies’ marginal tax rates, we find a positive and substantial long-run tax effect on leverage. Leverage responds more to decreases in the marginal tax rate, and it responds to changes in the marginal rather than the average tax rate. Most importantly, we find that the marginal tax rate based on tax return...

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Publication status:
Published
Peer review status:
Peer reviewed
Version:
Accepted Manuscript

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Publisher copy:
10.1016/j.jbankfin.2017.12.004

Authors


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Institution:
University of Oxford
Division:
Social Sciences Division
Department:
Said Business School
More by this author
Institution:
University of Oxford
Division:
Social Sciences Division
Department:
Said Business School
More from this funder
Funding agency for:
Maffini, G
More from this funder
Funding agency for:
Maffini, G
Publisher:
Elsevier Publisher's website
Journal:
Journal of Banking and Finance Journal website
Volume:
88
Pages:
250-266
Publication date:
2017-12-20
Acceptance date:
2017-12-17
DOI:
EISSN:
1872-6372
ISSN:
0378-4266
Pubs id:
pubs:813456
URN:
uri:542c71a6-e0de-4f84-8a74-f007fbad20a9
UUID:
uuid:542c71a6-e0de-4f84-8a74-f007fbad20a9
Local pid:
pubs:813456

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