The Determinants of Corporate Financing Decisions before and after the Tax Integration System

• Main Authors: Liao, Tzu-Ying, 廖子瑩
• Other Authors: Suming Lin, Ph.D.
• Format: Others
• Language: zh-TW
• Published: 2003
• Online Access: http://ndltd.ncl.edu.tw/handle/86456767235783443127

碩士 === 國立臺灣大學 === 會計學研究所 === 91 === The study aims to examine the determinants of corporate financing decisions before and after Tax Integration System implemented in Taiwan in 1998. It also investigates whether the adoption of tax integration had a significant impact on corporate financing decisions. Following Mackie-Mason (1990), this study is based on incremental financing decisions and discrete choice analysis. Most previous researchers focused on debt/equity ratios, which are the cumulative result of separate annual decisions. Tests based on incremental decisions should have greater power than those based on the historical aggregate of decisions. Using a Logit model to analyze the firm-level data from 1995-2000 (except 1997 and 1998), the study finds that tax integration significantly reduced the probability of debt financing, supporting theoretical arguments that the imputation credit method of integration can reduce corporate financial leverage. The findings also indicate that company size is significantly and positively related to debt financing, while firms with higher effective tax rates (ETR), higher profitability (ROA), and a reputation for paying dividends (DPF) prefer equity financing. However, Factors such as the ratio of fixed assets plus inventory to total assets (DSEC), the ratio of research and development expenditures (RND), and industrial type (IND) are irrelevant to the corporate financing decisions.