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Heterogeneous Tax Sensitivity of Firm-level Investments

Author

Listed:
  • Egger, Peter

    (ETH Zuerich)

  • Erhardt, Katharina

    (ETH Zuerich)

  • Keuschnigg, Christian

    (Institute for Advanced Studies, Vienna and University of St. Gallen)

Abstract
Firms are heterogeneous in size, productivity, ownership concentration, governance, financial structure and other dimensions. This paper introduces a stylized theoretical framework to account for such differences and to explain the heterogeneous tax sensitivity of firm-level investments across firm types. We econometrically test the theoretical predictions, taking account of selection of firms into different regimes. We find important differences in the tax sensitivity of investment of small entrepreneurial and larger managerial firms in different financial regimes that are largely in line with theoretical results.

Suggested Citation

  • Egger, Peter & Erhardt, Katharina & Keuschnigg, Christian, 2014. "Heterogeneous Tax Sensitivity of Firm-level Investments," Economics Series 306, Institute for Advanced Studies.
    • Handle: RePEc:ihs:ihsesp:306
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    File URL: https://irihs.ihs.ac.at/id/eprint/2908
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    References listed on IDEAS

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    Cited by:

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    2. Hoseini, M., 2014. "Misreporting in the Value-Added Tax and the Optimal Enforcement," Discussion Paper 2014-061, Tilburg University, Center for Economic Research.
    3. Laurent Bach & Antoine Bozio & Brice Fabre & Arthur Guillouzouic & Claire Leroy & Clément Malgouyres, 2019. "Follow the money! Combining household and firm-level evidence to unravel the tax elasticity of dividend," Working Papers halshs-02415470, HAL.
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    6. Dai, Xiaoyong & Chapman, Gary, 2022. "R&D tax incentives and innovation: Examining the role of programme design in China," Technovation, Elsevier, vol. 113(C).

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    More about this item

    Keywords

    Corporate tax; personal taxes; firm heterogeneity; access to capital; manager-shareholder conflicts;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm

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