Levelling the debt–equity playing field: Evidence from Belgium

Muhammad Meki

European Economic Review, 2023, vol. 151, issue C

Abstract: I explore whether a Belgian policy that reduced the corporate tax bias towards debt finance was successful in lowering firm leverage. Using putatively exogenous time series variation in the cost of equity financing and a difference-in-differences strategy that includes similar firms from surrounding countries, I find that the policy did lead to increased equity ratios, with some evidence of a shift from short-term debt to long-term debt.

Keywords: Capital structure; Corporate taxation; Debt bias; Equity financing; Small and medium-sized enterprises (search for similar items in EconPapers)
JEL-codes: G32 H25 H63 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:151:y:2023:i:c:s001429212200188x

DOI: 10.1016/j.euroecorev.2022.104305

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