The Life Cycle of the Firm with Debt and Capital Income Taxes

Research output: Working paperDiscussion paperOther research output

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Abstract

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.
Original languageEnglish
Place of PublicationTilburg
PublisherMacroeconomics
Number of pages29
Volume2006-91
Publication statusPublished - 2006

Publication series

NameCentER Discussion Paper
Volume2006-91

Fingerprint

Debt
Life cycle
Capital income tax
Debt finance
Retained earnings
Equity
Theory of the firm
Investment decision
Payment
Debt repayment
Dividends
Financial decisions
Capital accumulation

Keywords

  • tax burden
  • capital income taxation
  • firm behaviour

Cite this

Brys, B., & Bovenberg, A. L. (2006). The Life Cycle of the Firm with Debt and Capital Income Taxes. (CentER Discussion Paper; Vol. 2006-91). Tilburg: Macroeconomics.
Brys, B. ; Bovenberg, A.L. / The Life Cycle of the Firm with Debt and Capital Income Taxes. Tilburg : Macroeconomics, 2006. (CentER Discussion Paper).
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Brys, B & Bovenberg, AL 2006 'The Life Cycle of the Firm with Debt and Capital Income Taxes' CentER Discussion Paper, vol. 2006-91, Macroeconomics, Tilburg.

The Life Cycle of the Firm with Debt and Capital Income Taxes. / Brys, B.; Bovenberg, A.L.

Tilburg : Macroeconomics, 2006. (CentER Discussion Paper; Vol. 2006-91).

Research output: Working paperDiscussion paperOther research output

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AB - 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.

KW - tax burden

KW - capital income taxation

KW - firm behaviour

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Brys B, Bovenberg AL. The Life Cycle of the Firm with Debt and Capital Income Taxes. Tilburg: Macroeconomics. 2006. (CentER Discussion Paper).