Economics at your fingertips  

Stimulating investment through incorporation

Michael Devereux () and Li Liu
Additional contact information
Michael Devereux: Oxford University Centre for Business Taxations

Authors registered in the RePEc Author Service: Michael P. Devereux () and Michael B. Devereux ()

No 1607, Working Papers from Oxford University Centre for Business Taxation

Abstract: We examine the effect of incorporation in stimulating small business investment. Exploring a 2006 UK tax reform that lowered the tax gain to incorporation and reduced the after-tax internal funds for small companies, we present three main results. First, a one-percentage-point reduction in the tax gain decreased the number of new incorporations by 4.5 percent. Second, on average, a ¡ê 1 reduction in the post-tax internal funds of newly-incorporated firms would reduce their investment by 90 pence, consistent with them facing severe financial constraints. Third, this impact on investment gradually diminished after incorporation, consistent with incorporation improving access to external finance.

New Economics Papers: this item is included in nep-acc
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) ... Series-16/WP1607.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found ( [301 Moved Permanently]-->

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this paper

More papers in Working Papers from Oxford University Centre for Business Taxation Contact information at EDIRC.
Bibliographic data for series maintained by Dongxian Guo (). This e-mail address is bad, please contact .

Page updated 2019-02-13
Handle: RePEc:btx:wpaper:1607