{"id":116386,"date":"2024-01-22T20:01:53","date_gmt":"2024-01-22T19:01:53","guid":{"rendered":"https:\/\/www.wifo.ac.at\/publication\/116386\/"},"modified":"2024-11-07T04:38:42","modified_gmt":"2024-11-07T03:38:42","slug":"capital-structure-corporate-taxation-and-firm-age-2","status":"publish","type":"publication","link":"https:\/\/www.wifo.ac.at\/en\/publication\/116386\/","title":{"rendered":"Capital Structure, Corporate Taxation and Firm Age"},"content":{"rendered":"","protected":false},"featured_media":0,"template":"","class_list":["post-116386","publication","type-publication","status-publish","hentry"],"acf":{"subtitle":"","text":"This paper analyses the relationship between corporate taxation, firm age and debt. We adapt a standard model of capital structure choice under corporate taxation, focusing on the financing and investment decisions a firm is typically faced with. Our model suggests that the debt ratio is positively associated with the corporate tax rate, and negatively with firm age. Further, we predict that the tax-induced advantage of debt is more important for older than for younger firms. To test these hypotheses empirically, we use a cross-section of 405,000 firms from 35 European countries and 126 NACE 3-digit industries. In line with previous research, we find that a firm's debt ratio increases with the corporate tax rate. Further, we observe that older firms exhibit smaller debt ratios than their younger counterparts. Finally, consistent with our theoretical model, we find a positive interaction between corporate taxation and firm age, indicating that the impact of corporate taxation on debt is increasing over a firm's life-time.","onlinedate":"2012-04-20 02:00:00","lang":"English","publication_series":"","publication_date":"20120401","publication_date_year":"","publication_date_full":false,"publication_num_pages":"32","keywords":"[\"Capital structure\",\"Corporate taxation\",\"Firm age\"]","jelcodes":"[]","related_publications":"[]","pdf":344042,"zip":null,"link":"","monthly_report":true,"monthly_report_main":false,"monthly_report_volume":"","monthly_report_pages":"","monthly_report_pages_sort":"0","issue":"424","journal":"WIFO Working Papers","publisher":"","invisible":false,"external":false,"embargo_date":null,"types":[44410],"research_groups":[3491,3481],"collaboration":"","persons":[3785,14823,4973],"persons_data":"[{\"personId\":3785,\"personName\":\"Michael Pfaffermayr\",\"organisationNames\":[]},{\"personId\":14823,\"personName\":\"Matthias St\u00f6ckl\",\"organisationNames\":[]},{\"personId\":4973,\"personName\":\"Hannes Winner\",\"organisationNames\":[]}]","clients":[],"subclients":[],"partners":[],"topics":[],"host_publication_title":"","host_publication_subtitle":"","place_of_publication":"","host_publication_editors":"[]","type_description":"","output_media":"","chapter":"","article_number":"","citations":"{\"apa\":\"<div class=\\\"rendering rendering_researchoutput  rendering_researchoutput_apa rendering_contributiontoperiodical rendering_apa rendering_contributiontoperiodical_apa\\\"><span>Pfaffermayr, M.<\\\/span>, St\u00f6ckl, M.<span>, &amp; Winner, H.<\\\/span> (2012). <span>Capital Structure, Corporate Taxation and Firm Age<\\\/span>. <span><em>WIFO Working Papers<\\\/em><\\\/span>, (424). <a onclick=\\\"window.open(this.href, '_blank','noopener,noreferrer'); return false;\\\" href=\\\"https:\\\/\\\/www.wifo.ac.at\\\/wwa\\\/pubid\\\/44093\\\" class=\\\"link\\\"><span>https:\\\/\\\/www.wifo.ac.at\\\/wwa\\\/pubid\\\/44093<\\\/span><\\\/a><\\\/div>\",\"vancouver\":\"<div class=\\\"rendering rendering_researchoutput  rendering_researchoutput_vancouver rendering_contributiontoperiodical rendering_vancouver rendering_contributiontoperiodical_vancouver\\\"><span>Pfaffermayr M<\\\/span>, St\u00f6ckl M<span>, Winner H<\\\/span>. <span class=\\\"title\\\"><span>Capital Structure, Corporate Taxation and Firm Age<\\\/span><\\\/span>. <span>WIFO Working Papers<\\\/span>. 2012 Apr;(424).<\\\/div>\",\"bibtex\":\"<div class=\\\"rendering rendering_researchoutput  rendering_researchoutput_bibtex rendering_contributiontoperiodical rendering_bibtex rendering_contributiontoperiodical_bibtex\\\"><div>@misc{2671626c944e43b59a216876f8dcda83,<\\\/div><div>  title    = \\\"Capital Structure, Corporate Taxation and Firm Age\\\",<\\\/div><div>  abstract = \\\"This paper analyses the relationship between corporate taxation, firm age and debt. We adapt a standard model of capital structure choice under corporate taxation, focusing on the financing and investment decisions a firm is typically faced with. Our model suggests that the debt ratio is positively associated with the corporate tax rate, and negatively with firm age. Further, we predict that the tax-induced advantage of debt is more important for older than for younger firms. To test these hypotheses empirically, we use a cross-section of 405,000 firms from 35 European countries and 126 NACE 3-digit industries. In line with previous research, we find that a firm's debt ratio increases with the corporate tax rate. Further, we observe that older firms exhibit smaller debt ratios than their younger counterparts. Finally, consistent with our theoretical model, we find a positive interaction between corporate taxation and firm age, indicating that the impact of corporate taxation on debt is increasing over a firm's life-time.\\\",<\\\/div><div>  keywords = \\\"Capital structure, Corporate taxation, Firm age, Capital structure, Corporate taxation, Firm age\\\",<\\\/div><div>  author   = \\\"Michael Pfaffermayr and Matthias St{\\\\\\\"o}ckl and Hannes Winner\\\",<\\\/div><div>  year     = \\\"2012\\\",<\\\/div><div>  month    = apr,<\\\/div><div>  language = \\\"English\\\",<\\\/div><div>  journal  = \\\"WIFO Working Papers\\\",<\\\/div><p>}<\\\/p><\\\/div>\",\"ris\":\"<div class=\\\"rendering rendering_researchoutput  rendering_researchoutput_ris rendering_contributiontoperiodical rendering_ris rendering_contributiontoperiodical_ris\\\"><p>TY  - GEN<\\\/p><p>T1  - Capital Structure, Corporate Taxation and Firm Age<\\\/p><p>AU  - Pfaffermayr, Michael<\\\/p><p>AU  - St\u00f6ckl, Matthias<\\\/p><p>AU  - Winner, Hannes<\\\/p><p>PY  - 2012\\\/4<\\\/p><p>Y1  - 2012\\\/4<\\\/p><p>N2  - This paper analyses the relationship between corporate taxation, firm age and debt. We adapt a standard model of capital structure choice under corporate taxation, focusing on the financing and investment decisions a firm is typically faced with. Our model suggests that the debt ratio is positively associated with the corporate tax rate, and negatively with firm age. Further, we predict that the tax-induced advantage of debt is more important for older than for younger firms. To test these hypotheses empirically, we use a cross-section of 405,000 firms from 35 European countries and 126 NACE 3-digit industries. In line with previous research, we find that a firm's debt ratio increases with the corporate tax rate. Further, we observe that older firms exhibit smaller debt ratios than their younger counterparts. Finally, consistent with our theoretical model, we find a positive interaction between corporate taxation and firm age, indicating that the impact of corporate taxation on debt is increasing over a firm's life-time.<\\\/p><p>AB  - This paper analyses the relationship between corporate taxation, firm age and debt. We adapt a standard model of capital structure choice under corporate taxation, focusing on the financing and investment decisions a firm is typically faced with. Our model suggests that the debt ratio is positively associated with the corporate tax rate, and negatively with firm age. Further, we predict that the tax-induced advantage of debt is more important for older than for younger firms. To test these hypotheses empirically, we use a cross-section of 405,000 firms from 35 European countries and 126 NACE 3-digit industries. In line with previous research, we find that a firm's debt ratio increases with the corporate tax rate. Further, we observe that older firms exhibit smaller debt ratios than their younger counterparts. Finally, consistent with our theoretical model, we find a positive interaction between corporate taxation and firm age, indicating that the impact of corporate taxation on debt is increasing over a firm's life-time.<\\\/p><p>KW  - Capital structure<\\\/p><p>KW  - Corporate taxation<\\\/p><p>KW  - Firm age<\\\/p><p>KW  - Capital structure<\\\/p><p>KW  - Corporate taxation<\\\/p><p>KW  - Firm age<\\\/p><p>M3  - WIFO series<\\\/p><p>JO  - WIFO Working Papers<\\\/p><p>JF  - WIFO Working Papers<\\\/p><p>ER  - <\\\/p><\\\/div>\"}","scientific_assistance":"[]","scientific_review":"[]","version":"","release_date":null,"expiration_date":null,"surveyor":"","research_assistance":"","edv":"","additional_info_de":"","additional_info_en":""},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v28.0 (Yoast SEO v28.0) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Capital Structure, Corporate Taxation and Firm Age - WIFO<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.wifo.ac.at\/en\/publication\/116386\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Capital Structure, Corporate Taxation and Firm Age\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.wifo.ac.at\/en\/publication\/116386\/\" \/>\n<meta property=\"og:site_name\" content=\"WIFO\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/WIFOat\/\" \/>\n<meta property=\"article:modified_time\" content=\"2024-11-07T03:38:42+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.wifo.ac.at\/wp-content\/uploads\/2024\/05\/WIFO-Gebaeude-FotoAlexanderMueller-www.alexandermueller.at-IMG_6326-Bearbeitet-1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1920\" \/>\n\t<meta property=\"og:image:height\" content=\"1280\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:site\" content=\"@WIFOat\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.wifo.ac.at\\\/en\\\/publication\\\/116386\\\/\",\"url\":\"https:\\\/\\\/www.wifo.ac.at\\\/en\\\/publication\\\/116386\\\/\",\"name\":\"Capital Structure, Corporate Taxation and Firm Age - 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