Thin Capitalization Rules and Entrepreneurial Capital Structure Decisions

Artikel

Tax planners often choose debt over equity financing. As this has led to increased corporate debt financing, many countries have introduced thin capitalization rules to secure their tax revenues. In a general capital structure model we analyze if thin capitalization rules affect dividend and financing decisions, and whether they can partially explain why corporations receive both debt and equity capital. We model the Belgian, German and Italian rules as examples. We find that the so-called Miller equilibrium and definite financing effects depend significantly on the underlying tax system. Further, our results are useful for the treasury to decide what thin capitalization type to implement.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: BuR - Business Research ; ISSN: 1866-8658 ; Volume: 2 ; Year: 2009 ; Issue: 2 ; Pages: 147-169 ; Göttingen: VHB - Verband der Hochschullehrer für Betriebswirtschaft, German Academic Association of Business Research

Classification and Topics

• Classification: Management
• Subject: Miller equilibrium ; business taxation ; capital structure ; critical income tax rate ; financing decision ; tax planning ; thin capitalization ; Kapitalstruktur ; Bilanzierungspflicht ; Betriebliche Finanzwirtschaft ; Unternehmensbesteuerung ; Steuerplanung ; Belgien ; Deutschland ; Italien

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Maßbaum, Alexandra ; Sureth, Caren
• Event: Veröffentlichung
• (who): VHB - Verband der Hochschullehrer für Betriebswirtschaft, German Academic Association of Business Research
• (where): Göttingen
• (when): 2009

Further information

• DOI: doi:10.1007/BF03342708
• Handle: http://hdl.handle.net/10419/103678
• URN: urn:nbn:de:0009-20-21638
• Last update: 10.03.2025, 11:41 AM CET