This paper analyses the impact of capital income taxes on financial and investment decisions of corporations.Extending Sinn's (1991) nucleus theory of the firm with debt finance, the model determines the optimal sources of finance (debt, newly issued equity or retained earnings), the optimal use of the investment's earnings (dividends, retentions, interest payments or debt redemption), and the optimal capital accumulation throughout the life cycle of the firm.
|Place of Publication||Tilburg|
|Number of pages||29|
|Publication status||Published - 2006|
|Name||CentER Discussion Paper|
- tax burden
- capital income taxation
- firm behaviour