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The Effects of“ Replacing Business Tax with VAT Reform” on Firms’Capital Structure: An Analysis Based on the Perspective of No-DebtRelated Tax Shields(PDF)

《南京师大学报》(社会科学版)[ISSN:1006-6977/CN:61-1281/TN]

Issue:
2019年01期
Page:
130-
Research Field:
经济学研究
Publishing date:

Info

Title:
The Effects of“ Replacing Business Tax with VAT Reform” on Firms’Capital Structure: An Analysis Based on the Perspective of No-DebtRelated Tax Shields
Author(s):
YAO Yutao WANG Yuetang
Keywords:
business tax replaced with VAT reform capital structure no-debt related tax shields taxexhaustion status ownership
PACS:
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DOI:
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Abstract:
Institutional environment is an important factor influencing capital structure. Based on the reformto replace the business tax with a value-added tax, this paper seeks to explore how the reform affects capitalstructure from the perspective of no-debt related tax shields. Empirical results suggest that the reform to replacebusiness tax with a value-added tax has decreased interest-bearing debt significantly, especially for firms whichare almost in a tax exhaustion status. Compared with state-owned enterprises, the non-state-owned firms aremore obviously affected by the reform, giving stronger empirical support to the hypothesis of tax exhaustionstatus. Additionally, the results above are more pronounced in long-term interest-bearing debt. However,short-term interest-bearing debt does not show the same results. Our results not only provide new evidence onsubstitution effect between no-debt related tax shields and capital structure, but also suggest that the ownershipof the firms affects the choice of capital structure.

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Last Update: 2019-01-25