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AuthorTemimi, Akram
AuthorZeitun, Rami
AuthorMimouni, Karim
Available date2017-01-04T07:47:20Z
Publication Date2016-12
Publication NameJournal of Multinational Financial Managementen_US
CitationAkram Temimi, Rami Zeitun, Karim Mimouni, How does the tax status of a country impact capital structure? Evidence from the GCC region, Journal of Multinational Financial Management, Volumes 37–38, December 2016, Pages 71-89
AbstractWe investigate whether the tax status of a country has an impact on corporate capital structure. This research question is important and timely given that the empirical literature has not reached a consensus on the effect of taxes on corporate leverage. The Gulf Cooperation Council region, which is characterized by a unique fiscal environment, provides a natural laboratory for the analysis. We find that taxes have direct and indirect effects on leverage. The presence of taxes strengthens the effect of tangibility and GDP growth on leverage, while it weakens the effect of profitability and liquidity. The relationships between firms’ growth opportunities and leverage and size and leverage do not seem to be affected by taxes. We also show that the effect of taxes is different by industry. Controlling for the tax status of the country is important in some industries and irrelevant in others.
PublisherElsevier B.V.
SubjectDynamic capital structure
SubjectAgency costs
SubjectDebt conservatism puzzle
TitleHow does the tax status of a country impact capital structure? Evidence from the GCC region
Volume Number37-38

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