Effects of ultimate ownership structure and corporate tax on capital structures: Evidence from Taiwan

Cheng Few Lee, Nan Ting Kuo

Research output: Contribution to journalArticlepeer-review

17 Scopus citations

Abstract

Our study investigates how ultimate ownership structure and the corporate tax rate affect the equilibrium trade-off relation between manager ownership and debt in reducing agency costs. Considering the presence of the controlling shareholder, we find that higher corporate tax rates strengthen the trade-off relation between manager ownership and debt while higher control rights held by the controlling shareholder weaken it as well as the strengthening effect of corporate tax rate. Our study contributes to the literature by revealing tax and ultimate ownership structure dimensions and their interactions as additional determinants of corporate capital structure.

Original languageEnglish (US)
Pages (from-to)409-425
Number of pages17
JournalInternational Review of Economics and Finance
Volume29
DOIs
StatePublished - Jan 2014

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

Keywords

  • Agency cost
  • Capital structure
  • Controlling shareholder
  • Manager ownership

Fingerprint

Dive into the research topics of 'Effects of ultimate ownership structure and corporate tax on capital structures: Evidence from Taiwan'. Together they form a unique fingerprint.

Cite this