Corporate capital structure and the characteristics of suppliers and customers

Kale, Jayant R.; Shahrur, Husayn

doi:10.1016/j.jfineco.2005.12.007

Cited by 460 publications

(300 citation statements)

References 45 publications

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“…Regarding Nokia in 2013, one insider indicated that the deal between the two companies would help to bring the relationship-specific assets that are difficult to contract on. Allen and Phillips (2000) and Kale and Shahrur (2007) show that R&D increases with interaction between alliance partners, consistent with the needed R&D incentives to develop relationship-specific assets.…”

mentioning

confidence: 58%

The Incentives for Vertical Mergers and Vertical Integration

2013

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mentioning

confidence: 58%

The Incentives for Vertical Mergers and Vertical Integration

2013

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“…Some studies investigating the reasons that lead companies to the choice of funding have also focussed on corporate structural peculiarities regarding other typical non-financial stakeholders, such as the employees in primis (Berk et al, 2010;Matsa, 2010), but also the suppliers and the customers (Kale & Shahrur, 2007). It has been statistically noted that the capital structure is affected by them and can depend on the conflicting interests of these very subjects in the company.…”

Section: Level Of Corporate Indebtedness: Fundamentals Of Literature mentioning

confidence: 99%

Leverage Risk. The Weight of Borrowed Capital Distinguishes the Solvency of Firms: An Empirical Analysis on a Sample of 4,500 Italian SMEs

Muscettola¹

2013

IJEF

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The analysis of the financial structure of firms is crucial in order to investigate their possibilities of profitable progress or, on the other hand, their probability of default. In this perspective, the aim of this work, which is supported by a large analysis sample, is to describe the structure of onerous debt in Italian SMEs and to decipher the possible links between it and the probability of default. We therefore intend to answer two questions: can insolvent firms be identified by analysing only the weight of financial debts? Is it possible to isolate a risk of leverage among the dangers leading companies to bankruptcy?

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“…Furthermore, company-specific fixed effects will be used to control unobserved firm-specific differences which are time-invariant. Therefore, we are able to control for determinants such as industry, as well as product and customer characteristics which are analysed in recent empirical studies (e.g., Kale and Shahrur, 2007), provided that they remain constant over time.…”

Section: Capital Structure Choice and Non-tax Factorsmentioning

confidence: 99%

The Impact of Personal and Corporate Taxation on Capital Structure Choices

Overesch¹,

Voeller²

2010

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp08020.pdf Non-Technical SummaryCapital structure adjustments can be used to reduce the total tax burden on company investment since the taxation of the return on equity and debt capital differs in most countries. At the corporate level, interest payments reduce taxable profits while such a deduction is not feasible in the case of equity financing. At the shareholder level, effective tax rates on dividend and interest income differ as well. Therefore, the relative tax benefits of different sources of finance are supposed to have an impact on financing decisions.Theory suggests that both corporate profit tax and personal capital income taxes shouldbe considered in order to analyze the tax impact on capital structure choices.Since previous literature mainly focuses on the taxation of corporate profits, empirical evidence with respect to the possible impact of personal capital income taxation on capital structure choices is still scarce. Therefore, this paper aims at analyzing the effects from different taxation of equity and debt on capital structures of European firms while taking into account both personal and corporate income taxation. For the empirical analysis we employ a rich panel of firm-level financial accounting data of companies located in 23 European countries, taken from the AMADEUS data base. In contrast to other recent papers, we focus mainly on stand-alone companies. Furthermore, we collect detailed information about the tax systems of the considered countries during the period from 2000 until 2005.The empirical results suggest that a higher tax benefit of debt has the expected significant positive impact on companies' financial leverage. Additional analysis confirms that debt ratios are affected by personal income taxation: the level of dividend taxes has a positive impact on the debt to assets ratio, whereas the taxation of personal interest income negatively affects corporate leverage. In addition, we find evidence that the capital structures of smaller companies react more heavily to higher tax benefits of debt. In contrast, this tax benefit only has a minor impact on the financial decisions of parent companies belonging to a group of affiliated firms. Zusammenfassung (Summary in German)

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Corporate capital structure and the characteristics of suppliers and customers

Cited by 460 publications

References 45 publications

The Incentives for Vertical Mergers and Vertical Integration

The Incentives for Vertical Mergers and Vertical Integration

Leverage Risk. The Weight of Borrowed Capital Distinguishes the Solvency of Firms: An Empirical Analysis on a Sample of 4,500 Italian SMEs

The Impact of Personal and Corporate Taxation on Capital Structure Choices

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