The purpose of this paper is to investigate the interest tax deductibility effect on cost of capital under earning stripping rules recalling Modigliani-Miller's theorem (1958, 1963). In fact, Italy's corporate taxation, as other countries, does not allow to fully deduct interest expenses of debt...

We illustrate the welfare benefit of tax subsidies to corporate debt financing and study how the social cost/benefit trade-off of the subsidy changes with the duration of industry distress. To illustrate the benefit, we model two firms, which engage in a socially wasteful competition for...

This paper examines the impact of tax incentives on corporate risk-taking. Exploiting China's accelerated depreciation policy in 2014 as the exogenous source of variation, the difference-in-differences (DID) estimation shows that for the average firm in the sample, the accelerated depreciation...

Anti-tax loss trafficking rules disallow the use of loss carryforwards after a change in ownership or activity (such as significant changes in turnover, employment, or the product portfolio). This restriction could threaten accumulated loss carryforwards of start-ups. Accounting for the...

We analyze the effect of investor level taxes, firm-specific ownership structure and firm-specific payout policy on firms' capital structure choice. Our analysis is based on data for 10,983 firms from 13 Central and Eastern European (CEE) countries over the time period 2002-2012. Our results...