Capital Structure Choice and Company Taxation: A Meta-Study

Lars Feld, Jost Heckemeyer and Michael Overesch

No 3400, CESifo Working Paper Series from CESifo

Abstract: This paper provides a quantitative review of the empirical literature on the tax impact on corporate debt financing. Synthesizing the evidence from 46 previous studies, we find that this impact is substantial. In particular, the tax rate proxy determines the outcome of primary analyses. Measures like the simulated marginal tax rate (Graham (1996a)) avoid a downward bias in estimates for the debt response to tax. Moreover, debt characteristics, econometric specifications, and the set of control-variables affect tax effects. Accounting for misspecification biases by means of meta-regressions, we predict a marginal tax effect on the debt ratio of 0.3.

Keywords: capital structure; corporate income tax; meta-analysis (search for similar items in EconPapers)
JEL-codes: F23 G30 H32 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (29)

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Related works:
Journal Article: Capital structure choice and company taxation: A meta-study (2013)
Working Paper: Capital structure choice and company taxation: A meta-study (2011)
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