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| Title: | | Italy's ACE tax and its effect on a firm's leverage  |
| Authors: | | Panteghini, Paolo Parisi, Maria Laura Pighetti, Francesca |
| Issue Date: | | 2012 |
| Series/Report no.: | | Economics Discussion Papers 2012-31 |
| Abstract: | | This article describes the new ACE-type system implemented in Italy since 2012. The authors first show that this system reduces but does not eliminate the financial distortion due to interest deductibility. Using a dataset of Italian companies, the authors analyze the impact of this relief on Italian firm capital structure. Despite the permanence of a tax advantage and its gradual implementation, the ACE relief is estimated to reduce significantly leverage. By decreasing default risk it is also expected to reduce systemic risk. |
| Subjects: | | ACE business taxation leverage |
| JEL: | | H25 H32 |
| Creative Commons License: | |  |
| Document Type: | | Working Paper |
| Appears in Collections: | | Economics: The Open-Access, Open-Assessment E-Journal - Discussion Papers
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