Firm financing in Chile after the 2014-2015 tax reform: Debt of equality?

This paper analyzes the effects of the 2014-2015 Chilean tax reform on firms' valuation and incentives to retain earnings and finance their operations with equity versus debt. By analyzing the effects of the reform on total taxes paid and cash flows received by investors, the paper concludes th...

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Autor principal:	Hernández T,Leonardo
Lenguaje:	English
Publicado:	ILADES. Universidad Alberto Hurtado. 2016
Materias:	Corporate tax income tax payout ratio tax avoidance firm financing
Acceso en línea:	http://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-88702016000200003
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spelling	oai:scielo:S0718-887020160002000032016-11-16Firm financing in Chile after the 2014-2015 tax reform: Debt of equality?Hernández T,Leonardo Corporate tax income tax payout ratio tax avoidance firm financing This paper analyzes the effects of the 2014-2015 Chilean tax reform on firms' valuation and incentives to retain earnings and finance their operations with equity versus debt. By analyzing the effects of the reform on total taxes paid and cash flows received by investors, the paper concludes that in general the reform reduces the value of firms and lessens the incentives to retain earnings. Also, simulations show that the majority of firms would choose the accrual or 'attributed' tax based system. However, if the latter is not permitted firms will choose debt over equity. The cash-based or semi-integrated system becomes the preferred option only when tax avoidance is possible.info:eu-repo/semantics/openAccessILADES. Universidad Alberto Hurtado.Revista de análisis económico v.31 n.2 20162016-10-01text/htmlhttp://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-88702016000200003en10.4067/S0718-88702016000200003
institution	Scielo Chile
collection	Scielo Chile
language	English
topic	Corporate tax income tax payout ratio tax avoidance firm financing
spellingShingle	Corporate tax income tax payout ratio tax avoidance firm financing Hernández T,Leonardo Firm financing in Chile after the 2014-2015 tax reform: Debt of equality?
description	This paper analyzes the effects of the 2014-2015 Chilean tax reform on firms' valuation and incentives to retain earnings and finance their operations with equity versus debt. By analyzing the effects of the reform on total taxes paid and cash flows received by investors, the paper concludes that in general the reform reduces the value of firms and lessens the incentives to retain earnings. Also, simulations show that the majority of firms would choose the accrual or 'attributed' tax based system. However, if the latter is not permitted firms will choose debt over equity. The cash-based or semi-integrated system becomes the preferred option only when tax avoidance is possible.
author	Hernández T,Leonardo
author_facet	Hernández T,Leonardo
author_sort	Hernández T,Leonardo
title	Firm financing in Chile after the 2014-2015 tax reform: Debt of equality?
title_short	Firm financing in Chile after the 2014-2015 tax reform: Debt of equality?
title_full	Firm financing in Chile after the 2014-2015 tax reform: Debt of equality?
title_fullStr	Firm financing in Chile after the 2014-2015 tax reform: Debt of equality?
title_full_unstemmed	Firm financing in Chile after the 2014-2015 tax reform: Debt of equality?
title_sort	firm financing in chile after the 2014-2015 tax reform: debt of equality?
publisher	ILADES. Universidad Alberto Hurtado.
publishDate	2016
url	http://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-88702016000200003
work_keys_str_mv	AT hernandeztleonardo firmfinancinginchileafterthe20142015taxreformdebtofequality
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Firm financing in Chile after the 2014-2015 tax reform: Debt of equality?

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