Please use this identifier to cite or link to this item: http://hdl.handle.net/2440/97909
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dc.contributor.authorKarpavicius, S.en
dc.contributor.authorYu, F.en
dc.date.issued2016en
dc.identifier.citationEconomic Modelling, 2016; 54:100-116en
dc.identifier.issn1873-6122en
dc.identifier.urihttp://hdl.handle.net/2440/97909-
dc.description.abstractThis paper analyzes how shareholder wealth, firm characteristics, and public finance would be impacted if tax deductibility of interest expenses were eliminated. We find that shareholder value would decrease by 3.5%. Under the new regime, firms would be smaller and less levered, would have less productive capital, and would feature lower default probabilities. The effects on aggregate output and employment would be negative. However, the government's revenues from corporate income tax would increase by 3% in the long-run and could be used to partially offset the negative side effects of the reform. The current period of historically low corporate bond yields is probably the best time to change the treatment of interest expenses.en
dc.description.statementofresponsibilitySigitas Karpavičius, Fan Yuen
dc.language.isoenen
dc.publisherElsevieren
dc.rights© 2015 Elsevier B.V. All rights reserved.en
dc.subjectCorporate income tax; Tax deductibility; Interest expensesen
dc.titleShould interest expenses be tax deductible?en
dc.typeJournal articleen
dc.identifier.rmid0030044873en
dc.identifier.doi10.1016/j.econmod.2015.12.017en
dc.identifier.pubid232524-
pubs.library.collectionBusiness School publicationsen
pubs.library.teamDS01en
pubs.verification-statusVerifieden
pubs.publication-statusPublisheden
dc.identifier.orcidKarpavicius, S. [0000-0001-9601-6397]en
Appears in Collections:Business School publications

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