Curbing Corporate Debt Bias is popular PDF and ePub book, written by Ruud A. de Mooij in 2017-01-30, it is a fantastic choice for those who relish reading online the Business & Economics genre. Let's immerse ourselves in this engaging Business & Economics book by exploring the summary and details provided below. Remember, Curbing Corporate Debt Bias can be Read Online from any device for your convenience.
Curbing Corporate Debt Bias Book PDF Summary
Tax provisions favoring corporate debt over equity finance (“debt bias”) are widely recognized as a risk to financial stability. This paper explores whether and how thin-capitalization rules, which restrict interest deductibility beyond a certain amount, affect corporate debt ratios and mitigate financial stability risk. We find that rules targeted at related party borrowing (the majority of today’s rules) have no significant impact on debt bias—which relates to third-party borrowing. Also, these rules have no effect on broader indicators of firm financial distress. Rules applying to all debt, in contrast, turn out to be effective: the presence of such a rule reduces the debt-asset ratio in an average company by 5 percentage points; and they reduce the probability for a firm to be in financial distress by 5 percent. Debt ratios are found to be more responsive to thin capitalization rules in industries characterized by a high share of tangible assets.
Detail Book of Curbing Corporate Debt Bias PDF
- Author : Ruud A. de Mooij
- Release : 30 January 2017
- Publisher : International Monetary Fund
- ISBN : 9781475573053
- Genre : Business & Economics
- Total Page : 20 pages
- Language : English
- PDF File Size : 11,9 Mb
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