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1、Handbook of the Economics of Finance 2013 Elsevier B.V. All rights reserved.http:/dx.doi.org/10.1016/B978-0-44-453594-8.00003-3123CHAPTERJohn R. Graham Fuqua School of Business, Duke University, and The National Bureau of Economic AnalysisDo Taxes Affect Corporate Decisions? A Review3Contents1. Intr
2、oduction 124 2. Taxes and Capital StructureThe US Tax System 1262.1 Theory and Empirical Predictions 1262.2 Empirical Evidence on Whether the Tax Advantage of Debt Increases Firm Value 1332.2.1 Exchange Offers 1332.2.2 Cross-Sectional Regressions 1352.2.3 Marginal Tax Benefit Functions 1362.3 Empiri
3、cal Evidence on Whether Corporate Taxes Affect Debt vs. Equity Policy 1412.3.1 Static Tax Rates 1412.3.2 Dynamically Simulated Marginal Tax Rates 1432.3.3 Endogeneity of Corporate Tax Status 1452.3.4 Time-Series and Small-Firm Evidence of Tax Effects 1472.3.5 Economic Importance of Tax Effects on Ca
4、pital Structure Decisions 1482.4 Empirical Evidence on Whether Personal Taxes Affect Corporate Debt vs. Equity Policy 1502.4.1 Market-Based Evidence on How Personal Taxes Affect Security Returns 1532.5 Beyond Debt vs. Equity 1582.5.1 Leasing 1582.5.2 Pensions 1602.5.3 Debt Maturity 161 3. Taxes and
5、Capital StructureMultinational Tax Issues 1633.1 Tax Incentives and Financial Policy in Multinational Firms: Theory and Tax Rules 1643.2 Empirical Evidence Related to Multinational Tax Incentives to Use Debt 1703.3 Other Predictions and Evidence about Multinational Tax Incentives 1733.4 Empirical Ev
6、idence Related to Repatriation of Profits Earned Abroad 174 4. Taxes, LBOs, Corporate Restructuring, and Organizational Form 1754.1 Theory and Predictions 1754.1.1 Leveraged Buyouts 1754.1.2 Distressed Reorganizations and Chapter 11 1754.1.3 C-corporations vs. S-corporations 1754.1.4 Divestitures an
7、d Asset Sales 1764.1.5 R Shackelford and Shevlin, 2001). Articles reviewing how nontax factors such as agency and informational imperfections affect corporate financial decisions can be found in other chapters of this handbook.Figure 1 Corporate and personal income tax rates. The highest tax bracket
8、 statutory rates are shown for individuals and C-corporations. The corporate capital gains tax rate (not shown) was equal to the corporate income tax rate every year after 1987. In May 2003, President Bush signed into law a reduc- tion in the top personal income tax rate to 35% in 2003. This same la
9、w reduced top personal tax rates on capital gains and dividends to 15%. In late 2010, President Obama and Congress agreed to keep the per- sonal tax rates in place through 2012 and to revisit the issue later, and the BowlesSimpson commission recommended a reduction in the corporate income tax rate t
10、o 25%. Thus, as this chapter goes to press, it seems quite possible that personal and corporate income tax rates will change in the near future.John R. Graham126Modigliani and Miller argue that corporate financial policies do not add value in equilibrium, and therefore firm value equals the present
11、value of operating cash flows. Once imperfections are introduced, however, corporate financial policies can affect firm value, and firms should pursue a given policy until the marginal benefit of doing so equals the marginal cost. A common theme in tax research involves expressing how various tax ru
12、les and regulations affect the marginal benefit of corporate actions. For example, when tax rules allow interest deductibility, a $1 interest deduction provides tax savings of $1 C(.). The function C(.) measures corporate marginal tax benefits and is conditional on statutory tax rates, nondebt tax s
13、hields, the probability of expe- riencing a loss, international tax rules about dividend imputation and interest alloca- tion, organizational form, and various other tax rules. A common theme that runs throughout this chapter is to describe how various tax rules affect the C(.) benefit function, and
14、 therefore how they affect corporate incentives and decisions. A second but less common theme is related to how market imperfections affect tax costs. Given that this chapter reviews tax research, the emphasis is on research that describes how taxes affect costs and benefitsand the influence of nont
15、ax factors is discussed only briefly. There are multiple avenues for taxes to affect corporate decisions. As outlined in the Table of Contents, taxes can affect capital structure decisions, both domestic (Section 2) and multinational (Section 3), organizational form and restructurings (Section 4), p
16、ayout policy (Section 5), compensation policy (Section 6), risk management (Section 7), and the use of tax shelters (Section 8). For each of these areas, a brief theoretical frame- work is presented that describes how taxes might affect corporate decisions, followed by empirical predictions based on the theory and summaries of the related empirical evidence. This approach seeks to highlight important questions about how taxes affect corporate decisi
