Opportunities to Divert, Firm Value, and Taxation: Theory and Evidence from European Firms
Robert Krämer and
Vilen Lipatov
FinanzArchiv: Public Finance Analysis, 2012, vol. 68, issue 1, 17-47
Abstract:
We study the relationship between opportunities for managerial diversion, corporate tax system parameters, and the return on shareholder funds. Theoretically, in a simple game between corporate insiders and outsiders, higher costs of diversion increase the return. European firm-level data lend support to these results. Further, in civil-law countries an increase in the corporate tax rate has a positive effect on shareholder value, whereas in common-law countries it has a negative effect.
Keywords: corporate governance; corporate taxation (search for similar items in EconPapers)
JEL-codes: G3 H25 H26 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (1)
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Persistent link: https://EconPapers.repec.org/RePEc:mhr:finarc:urn:sici:0015-2218(201203)68:1_17:otdfva_2.0.tx_2-9
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DOI: 10.1628/001522108X632005
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