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Full-Text Articles in Business
Corporate Tax, Capital Structure, And The Accessibility Of Bank Loans: Evidence From China, Liansheng Wu, Heng Yue
Corporate Tax, Capital Structure, And The Accessibility Of Bank Loans: Evidence From China, Liansheng Wu, Heng Yue
Research Collection School Of Accountancy
In this paper, we investigate whether listed firms in China adjust their capital structure in response to an increase in the corporate taxrate. Although theories of capital structure suggest that corporate tax is an important determinant of capital structure, how exogenouschanges of the tax rate affect firms’ leverage decisions has not been fully explored. We examine a unique circumstance in which the Chinesegovernment increased the corporate tax rate of firms that had previously received local government tax rebates. The evidence indicatesthat these firms increased their leverage when the corporate tax rate increased. Further investigation suggests that the adjustment ofleverage was …
Business Aggression, Institutional Loans, And Credit Crisis: Evidence From Lending Practices In Leveraged Buyouts, Xiaping Jerry Cao, Wei-Ling Song, Joe Mason
Business Aggression, Institutional Loans, And Credit Crisis: Evidence From Lending Practices In Leveraged Buyouts, Xiaping Jerry Cao, Wei-Ling Song, Joe Mason
Research Collection Lee Kong Chian School Of Business
This paper investigates the lending practices related to leverage buyouts (LBOs) market between high and low write-down institutions. The write-downs, which are a proxy for business aggression of institutions, are mainly related to credit crisis from the beginning of 2007 to August 10, 2008. We find that high (low) write-down institutions increase (decrease) loan market share dramatically during the period of 2001-2006. The increase is mainly driven by the segment of loans sold to institutional investors, such as collateralized loan obligations vehicle, hedge fund, and insurance companies. Institutional loans originated by high write-down institutions carry significantly fewer covenants and higher …