Corporate Taxes and Firms Performance: Evidence from an Emerging Economy

A. M. Iregui-Bohórquez (), L. A. Melo-Becerra () and A. J. Orozco-Gallo ()
Authors registered in the RePEc Author Service: Antonio José Orozco Gallo () and Ligia Melo ()

Revista de Economía del Rosario, 2022, vol. 25, issue 1, No 20280

Abstract: Corporate taxes play an important role in a firm’s decision-making as they are part of the cost of capital. Thus, understanding the effect of taxes on the performance of firms in the context of frequent tax reforms, as is the case of Colombia, is of great relevance. We used the meta-frontier stochastic techniques, which allow us to estimate in two steps the technical efficiency of firms within each economic sector and between economic sectors in relation to the set of firms in the country. Then, using quantile regression analysis, we estimate both the effect of corporate taxation on firm performance as well as the effect of efficiency on firms’ tax payments. Results indicate that firms in some economic sectors could be benefiting from better production conditions, and that the most efficient firms.

Keywords: Corporate taxes; stochastic frontier analysis; firm performance (search for similar items in EconPapers)
JEL-codes: C23 D22 H25 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:col:000151:020280

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