Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/103678
Authors: 
Maßbaum, Alexandra
Sureth, Caren
Year of Publication: 
2009
Citation: 
[Journal:] BuR - Business Research [ISSN:] 1866-8658 [Volume:] 2 [Year:] 2009 [Issue:] 2 [Pages:] 147-169
Abstract: 
Tax planners often choose debt over equity financing. As this has led to increased corporate debt financing, many countries have introduced thin capitalization rules to secure their tax revenues. In a general capital structure model we analyze if thin capitalization rules affect dividend and financing decisions, and whether they can partially explain why corporations receive both debt and equity capital. We model the Belgian, German and Italian rules as examples. We find that the so-called Miller equilibrium and definite financing effects depend significantly on the underlying tax system. Further, our results are useful for the treasury to decide what thin capitalization type to implement.
Subjects: 
Miller equilibrium
business taxation
capital structure
critical income tax rate
financing decision
tax planning
thin capitalization
Persistent Identifier of the first edition: 
Document Type: 
Article

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