Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/167552
Authors: 
Langenmayr, Dominika
Lester, Rebecca
Year of Publication: 
2017
Series/Report no.: 
CESifo Working Paper 6566
Abstract: 
We study whether the corporate tax system provides incentives for risky firm investment. We analytically and empirically show two main findings: first, risk-taking is positively related to the length of tax loss periods because the loss rules shift some risk to the government; and second, the tax rate has a positive effect on risk-taking for firms that expect to use losses, and a weak negative effect for those that cannot. Thus, the sign of the tax effect on risky investment hinges on firm-specific expectations of future loss recovery.
Subjects: 
corporate taxation
risk-taking
net operating losses
JEL: 
H25
H32
G32
Document Type: 
Working Paper

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