Finocchiaro, Daria; Lombardo, Giovanni; Mendicino, Caterina - 2015 - Revised December 2017
How does inflation affect the investment decisions of financially constrained firms in the presence of corporate … taxation? Inflation interacts with corporate taxation via the deductibility of i) capital expenditures and ii) interest … payments on debt. Through the first channel, inflation increases firms' taxable profits and further distorts their investment …