Corporate Tax And Financing Decisions: An Emerging Market Experience

R. Okoyeuzu Chinwe ()
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R. Okoyeuzu Chinwe: University of Nigeria, Nsukka

Acta Universitatis Danubius. OEconomica, 2012, issue 3(3), 5-16

Abstract: The objective of this study is to determine the significance of the tax benefits in explaining observed leverage ratios amongst firms in Nigeria. To investigate how the results of previous studies and traditional theories on financial leverage compare with the real situation in the Nigeria corporate environment. The differential impact of tax treatment of debt on corporate financial policy in developed countries. The parameters of debt ratios are estimated by fitting multiple linear regression after this equation- l=f (t r, s, v, p, m, c, s). Our dataset covers a cross-section of 60 quoted firms from Nigerian stock Markets over a ten year period (1996-2005). The tax benefit of debt approximately equals fifteen (15) percent of firm value. However, this tax advantage does not seem to explain observed debt ratios since we could not obtain a statistically significant coefficient for the marginal tax rate. The provision of empirical evidence in support of known theories.

Keywords: tax shelter; capital structure; leverage; financing; firms (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:dug:actaec:y:2012:i:3:p:5-16

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