Corporate taxation and its reform: the effects on corporate financing decisions in Italy

Bontempi, Maria Elena ; Giannini, Silvia ; Golinelli, Roberto (2004) Corporate taxation and its reform: the effects on corporate financing decisions in Italy. p. 37. DOI 10.6092/unibo/amsacta/1507.
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Abstract

The aim of this paper is twofold. First, we measure the relationship between fiscal variables and companies debt choices in Italy using a dynamic representation of the modified pecking order model, where both trade-off and pecking order theories are nested. Second, our estimation results are used, jointly with some tax simulations undertaken with a company microsimulation tax-model (MATÍS), to assess the effects on leverage of two recent tax reforms in Italy since 1996. Main results suggest that: (a) fiscal effects are significant and robust explanations of firms’ financial behaviour; (b) the reforms analysed are able to induce similar reductions in firms’ leverage, when compared with the situation prevailing in 1996. However, the routes through which this occurs are different (relative price in the first case, cash flow in the second), tracing some important differences in the overall evaluation of the two reforms.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Bontempi, Maria Elena
Giannini, Silvia
Golinelli, Roberto
Keywords
capital structure, modified pecking order theory, corporate taxes, fiscal microsimulation, dynamic panel models
Subjects
DOI
Deposit date
15 Feb 2006
Last modified
17 Feb 2016 14:31
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