ESSAYS ON THE CORPORATE TAX POLICY EFFECTS ON INVESTMENT AND FINANCING CHOICES (TAX POLICY, ABANDONMENT, ACCOUNTING).

摘要

In this thesis, I examine tax policy effects on firms' investment and financing decisions and on social welfare. In the first essay (Chapter 2), I examine the tax bias in favor of debt financing. Contrary to the traditional view, this policy could encourage firms to choose less risky projects. If so, such a policy would increase social welfare, because it helps solve a principal-agent problem between firms and their non-owner shareholders--customers, suppliers, employees, and government.; In the second essay (Chapter 3), I examine abandonment tax provisions. Firms can obtain a net present value tax savings, because they are allowed to accelerate scheduled deductions to the year of abandonment. This option encourages firms to make risk, time horizon, and capital structure decisions in a manner that differs from conventional thinking and previous findings.; In the third essay (Chapter 4), I examine why a firm would choose a seemingly unfavorable accounting procedure, such as FIFO instead of LIFO and straight-line instead of accelerated depreciation. My theory is that such choices help to align manager and shareholder interests and that this mechanism is most important when managers have an informational advantage over shareholders. I present empirical evidence that shows a link between the magnitude of information asymmetry and the choice of a seemingly unfavorable accounting procedure.