Graham, John R.; Lemmon, Michael L.; Schallheim, James S. - In: Journal of Finance 53 (1998) 1, pp. 131-162
We provide evidence that corporate tax status is endogenous to financing decisions, which induces a spurious relation between measures of financial policy and many commonly used tax proxies. Using a forward-looking estimate of "before-financing" corporate marginal tax rates, we document a...