TY  - JOUR
T1  - The Impact of Tax Rate Changes on Intercorporate Investment
JF  - Advances in Accounting
Y1  - 2016
A1  - Gary,Robert
A1  - Moore,Jared
A1  - Sisneros,Craig
A1  - Terando,William
KW  - Accounting
AB  - We examine how tax rates impact investment by corporations in the stock market. We regress changes in intercorporate investment on changes in the various individual and corporate top statutory marginal tax rates (MTRs). We find a significant negative association between changes in individual capital gains MTRs and changes in intercorporate investment, while no such association is evident for changes in either individual ordinary or dividend MTRs. These results support the notion that corporations respond to the after-tax rate of return and/or market efficiency consequences brought about by a change in individual capital gains MTRs. We find a significant positive relation between changes in intercorporate investment and changes in corporate MTRs on ordinary income. These results are consistent with corporations scaling back expansion plans and instead investing free cash flows in equity securities as MTRs increase.
CY  - Amsterdam
VL  - 34
U2  - a
U4  - 14078947329
ID  - 14078947329
ER  -