How big are the tax benefits of debt?

• 成果类型: Article
• 署名作者: Graham, JR
• 署名单位: Duke University
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/0022-1082.00277
• 发表日期: 2000
• 页码: 1901-1941
• 关键词: CORPORATE FINANCING DECISIONS; capital structure; empirical-analysis; MANAGERIAL DISCRETION; personal taxes; cash flow; FIRMS; determinants; valuation; EXEMPT

摘要

I integrate under firm-specific benefit functions to estimate that the capitalized tax benefit of debt equals 9.7 percent of firm value (or as low as 4.3 percent, net of personal taxes). The typical firm could double tax benefits by issuing debt until the marginal tax benefit begins to decline. I infer how aggressively a firm uses debt by observing the shape of its tax benefit Function. Paradoxically, large, liquid, profitable Firms with low expected distress costs use debt conservatively. Product market factors, growth options, low asset collateral, and planning for future expenditures lead to conservative debt usage. Conservative debt policy is persistent.