| Summary: | 碩士 === 國立成功大學 === 會計學系碩博士班 === 94 === Our research has an important meaning towards looking for the lower agency cost. Seetharaman et al. (2001) was the pioneer who brought up the relationship the tax rate will develop on capital structure (like company’s debt level) and incentive compatible contract (like managerial ownership). Jensen and Warner (1988) also found that managerial ownership plays a key role in agent cost controlling , but determinants of managerial ownership remain obscure, and the interactions between different companies and managerial ownership also need further study.
Based on Seetharaman et al. (2001), this article joins the tax rate factor in policy making decision, adjusting some variables according to the characteristics of domestic and foreign companies, and takes domestic listed companies as examples. We try to understand whether the higher marginal tax rate has negative effects on managerial ownership and company’s debt level. That is, we will see if the company tends to increase its debt and decrease managerial ownership when tax rate rises.
In addition, we take the integration of business income tax and individual income tax into consideration, in accordance with our domestic circumstances. We examine the negative relation between managerial ownership and firm’s debt ratio after the integration of individual and corporate income taxes. We further study how the Tax integration affects the negative relation between higher marginal tax rate companies and lower marginal tax rate companies. With these empirical results, we hope the listed companies take some measures to coordinate the benefits of managers and shareholders, avoiding decisions against shareholders’interests.
The empirical results are summarized as follows: (1) managerial ownership are negatively related to firm’s debt with significance. That is, as the managers own more share of a company, the debt-ratio of the company will decline, and vice versa. (2)The negative relation in higher marginal tax rate companies are more significant than lower marginal tax rate ones. (3)After the integration of individual and corporate income taxes, this negative relation stated in (1) will be diminished. (4) After the integration of individual and corporate income taxes, our result stated in (2) remains unchanged.
Keywords:
managerial ownership, debt ratio, marginal tax rate, integration of business income tax and individual income tax, agent cost
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