Tax rate cut and firm investment: evidence from Thailand

Abstract

How do firms' investment respond to a large corporate tax rate cut in developing countries? This study uses a matched difference-indifference approach to estimate the investment responses of Thailand's 2012-13 corporate income tax cut. It finds that the tax cut has significantly boosted investment. The findings also underline the heterogeneity of the investment responses between local and foreign firms as well as the potential roles of policy uncertainty and market competition on investment response.

The combined impacts of fiscal and credit policies on green firm's investment opportunity: Evidences from Chinese firm‐level analysis

“…First, this article selects 442 green firms in six green industries as study samples and finds that subsidies and tax rebates have a significant U-shaped relationship with green firms' investment opportunities. This finding is different from the positive impact of subsidies and tax rebates on firm investment identified by Colomboa et al (2013), Dobbins and Jacob (2016), Hu et al (2019), andMuthitacharoen (2021). Second, credit loan sizes have a significant U-shaped impact on green firms' investment opportunities; this finding differs from the dual threshold effect of green credit identified by He et al (2019) and from the effect of external financial constraints on green-firm investment opportunities (similar to the negative effect of external financing on firm investment) identified by Duchin et al (2010) andG omez (2019).…”

“…The reform of capital taxes raises the firm investment (Liu et al, 2018), and tax incentives prompt private firms to invest in short-term development opportunities (Dai et al, 2020;Muthitacharoen, 2021). To investigate the U-shaped relationship between tax rebates and a green firm's investment opportunities, we incorporate the tax rebates and squared tax rebates into Equation 2 based on Hypothesis 1.…”

“…Private family firms avoid taxes less than public family and nonfamily firms (Brune et al, 2019). Tax cuts and credits generate an important impact on firm investments and capital allocation (Altug et al, 2009; Ayuso et al, 2018; Danielova & Sarkar, 2011; Dobbins & Jacob, 2016; Haga et al, 2019; Hines & Park, 2019; Marekwica, 2012; Muthitacharoen, 2021; Sarkar, 2012). Payout and repatriation taxes have a large impact on firm investment activity (Becker et al, 2013; Hanlon et al, 2015).…”

The Effect of the Effective Corporate Tax Rate Toward Investment Decision in Indonesian Public Company

“…This separate regression is used to conduct model test and to ensure that by being controlled by age and dummy ownership, the results are not much different and can be used as robustness check. Effective tax rate significantly negatively affects investment (Djankov et al, 2010;Dobbins & Jacob, 2016;Federici & Parisi, 2015;Muthitacharoen, 2021;Sankarganesh & Shanmugam, 2021). This result shows that hypothesis 1 reject 𝐻 0 .…”