Corporation tax asymmetries and investment: evidence from UK panel data

Devereux, Michael, Keen, Michael and Schiantarelli, Fabio (1994) Corporation tax asymmetries and investment: evidence from UK panel data. Journal of Public Economics, 53 (3). pp. 395-418.

Abstract

Theoretical work has emphasised the potentially powerful impact of corporation tax asymmetries on investment behaviour, but empirical work has mainly been confined to the measurement of effective tax rates. This paper uses panel data from 597 U.K. companies to ask: Are tax asymmetries important to understanding observed investment behaviour? An optimising investment model is developed and estimated both as a Q equation and a Euler equation in which the cost of capital appears. Careful modelling of asymmetries does not noticeably improve the empirical performance of these equations. Possible explanations are discussed.

Item Type: Article
Keywords: business tax; corporate income tax
Subject(s): Taxation
Centre: Oxford University Centre for Business Taxation
Date Deposited: 05 Dec 2011 10:36
Last Modified: 23 Oct 2015 14:06
URI: http://eureka.sbs.ox.ac.uk/id/eprint/1304

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