Collateral, Taxes, and Leverage

• 成果类型: Article
• 署名作者: Li, Shaojin; Whited, Toni M.; Wu, Yufeng
• 署名单位: Shanghai University of Finance & Economics; University of Michigan System; University of Michigan; National Bureau of Economic Research; University of Illinois System; University of Illinois Urbana-Champaign
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhw008
• 发表日期: 2016
• 页码: 1453
• 关键词: capital structure; Financial flexibility; GMM estimation; debt; INVESTMENT; RISK; AGENCY

摘要

We quantify the importance of collateral versus taxes for firms' capital structures. We estimate a dynamic model in which a taxable firm seeks financing for investment, and a dynamic contracting environment motivates endogenous collateral constraints. Optimal leverage stays a safe distance from the constraint, balancing the tax benefit of debt with the cost of lost financial flexibility. We estimate this flexibility cost to be 7.2% of firm assets, a percentage that is comparable to the tax benefit. Models with different tax rates fit the data equally well, and leverage responds to the tax rate only when taxes are low.