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Contribution Details
| Type | Master's Thesis |
| Scope | Discipline-based scholarship |
| Title | The effect of changes in corporate tax rates on the leverage ratio of Swiss listed firms |
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| Institution | University of Zurich |
| Faculty | Faculty of Business, Economics and Informatics |
| Number of Pages | 30 |
| Date | 2017 |
| Abstract Text | This thesis investigates the effect of taxes on firms’ leverage ratio. Corporate taxes as a signifi-cant determinant of firms’ capital structure choices have been well documented in many empiri-cal studies. This thesis implements studies among firms that listed on the Swiss stock exchange over the period of 2000-2015 using the difference in differences model. A significant asymmet-ric reaction of leverage is found in the testing result. There is only a significant positive correla-tion between leverage ratio and tax increase. Swiss listed firms increase their leverage ratio by 306 basis points on average by increasing corporate income tax of 1%. However, the leverage ratio is not affected by a tax decrease. This result is consistent with the dynamic tradeoff theory. |
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