Handbook of Empirical Corporate Finance

Chapter 11 TAXES AND CORPORATE FINANCE

JOHN R. GRAHAM^*

Fuqua School of Business, Duke University

Contents

Abstract

Keywords

1. Introduction

2. Taxes and capital structure—the U.S. tax system

2.1. Theory and empirical predictions

2.2. Empirical evidence on whether the tax advantage of debt increases firm value

2.2.1. Exchange offers

2.2.2. Cross-sectional regressions

2.2.3. Marginal benefit functions

2.3. Empirical evidence on whether corporate taxes affect debt vs. equity policy

2.3.1. Nondebt tax shields, profitability, and the use of debt

2.3.2. Directly estimating the marginal tax rate

2.3.3. Endogeneity of corporate tax status

2.3.4. Time-series and small-firm evidence of tax effects

2.4. Empirical evidence on whether personal taxes ...