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Does Tax Debt Capacity Matttter?

Hovick Shahnazarian ()
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Hovick Shahnazarian: Financial Stability Department, Sveriges Riksbank

Finnish Economic Papers, 2009, vol. 22, issue 1, 21-30

Abstract: Nordic corporations to a large extent both pay corporate tax and abstain from utilizing their depreciation allowances to the maximum extent possible. In this paper, we attempt to explain the empirical observation that most firms fails to maximize their tax usage. The model employed takes into account the argument that shareholders for some non-tax reasons have a preference for dividends over retained earnings. Furthermore, we also investigate whether a policy of not claiming the maximum amount of depreciation allowances could be value maximizing for the firm.

JEL-codes: G30 G31 G32 G35 G39 H25 (search for similar items in EconPapers)
Date: 2009
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