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Title:Italy's ACE tax and its effect on a firm's leverage PDF Logo
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:http://creativecommons.org/licenses/by-nc/2.0/de/deed.en
Document Type:Working Paper
Appears in Collections:Economics: The Open-Access, Open-Assessment E-Journal - Discussion Papers

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