Tax Policy Uncertainty and Corporate Debt Financing Decision-Making

Abstract

Abstract: By employing the data of Chinese A-share listed companies from 2007 to 2017, this paper empirically tests the impact of tax policy uncertainty on the scale of corporate debt financing. The findings show that the uncertainty of taxation policies has significantly reduced the scale of corporate debt financing, and this impact is more significant in the enterprises with higher degrees of financing constraints and less external demands. The results of further research shows that the uncertainty of tax policy would increase the costs of corporate debt financing and reduce the scale of short-term corporate credit financing, while no significant impact on the scale of long-term credit financing. The findings of the mechanism test indicate that the impact of tax policy uncertainty on the scale of debt financing is caused by the fluctuations in corporate cash flow.

Key words: tax policy uncertainty, debt financing, financing constraints, financing costs

CLC Number:

F275.1

JIN Yu, WEN Wen. Tax Policy Uncertainty and Corporate Debt Financing Decision-Making[J]. Contemporary Finance & Economics, 2020, 0(5): 135-147.

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