scholarly journals Cash on the Table? Imperfect Take-Up of Tax Incentives and Firm Investment Behavior

2021 ◽  
Author(s):  
Wei Cui ◽  
Jeffrey Hicks ◽  
Jing Xing
Keyword(s):  
Tax Incentives ◽  
Investment Behavior ◽  
Firm Investment

scholarly journals Tax Policy and Heterogeneous Investment Behavior

2017 ◽  
Vol 107 (1) ◽  
pp. 217-248 ◽  
Author(s):  
Eric Zwick ◽  
James Mahon
Keyword(s):  
Tax Policy ◽  
Small Firms ◽  
Financial Frictions ◽  
Tax Incentives ◽  
Cash Flows ◽  
Investment Behavior ◽  
Fixed Costs ◽  
Weighted Estimates ◽  
Equipment Investment ◽  
Accelerated Depreciation

We estimate the effect of temporary tax incentives on equipment investment using shifts in accelerated depreciation. Analyzing data for over 120,000 firms, we present three findings. First, bonus depreciation raised investment in eligible capital relative to ineligible capital by 10.4 percent between 2001 and 2004 and 16.9 percent between 2008 and 2010. Second, small firms respond 95 percent more than big firms. Third, firms respond strongly when the policy generates immediate cash flows, but not when cash flows only come in the future. This heterogeneity materially affects investment-weighted estimates and supports models in which financial frictions or fixed costs amplify investment responses. (JEL D21, D22, D92, G31, H25, H32)

scholarly journals Tax Incentives Policy, Firm Investment, Firm exports, and Gross Output: Panel Econometric Modelling

2021 ◽  
Vol 8 (1) ◽  
pp. p1
Author(s):  
Cyrus Mutuku ◽  
Joseph Sirengo ◽  
Dr. Mohamed Omar
Keyword(s):  
Tax Incentives ◽  
Second Phase ◽  
Firm Investment ◽  
Tax Incentive ◽  
Incentive Policy ◽  
Tax Expenditure ◽  
Firm Exports ◽  
Investment Firm ◽  
The Impact ◽  
Modelling Approach

A panel econometric model consisting of 118,380 firms, spanning 2014 to 2019 was used to determine the impact of tax incentive policy on firm investment, firm gross output, and exports. A two-stage modelling approach was used, first the decision to invest or export was modelled using a binary logit model. In the second phase, the impact of the tax incentives policy was estimated. The decisions to export and invest are marginally driven by tax incentive policy. A shilling given as tax expenditure increases the probability of investing and exporting by 0.018% and 0.48% respectively. The results from the study imply that export and investment-related tax incentives are either redundant or have a negligible impact on their respective target variables.

Local Political Uncertainty, Family Control, and Investment Behavior

2018 ◽  
Vol 53 (4) ◽  
pp. 1781-1804 ◽  
Author(s):  
Mario Daniele Amore ◽  
Alessandro Minichilli
Keyword(s):  
Family Firms ◽  
Family Members ◽  
Public Spending ◽  
Investment Behavior ◽  
Firm Investment ◽  
Political Uncertainty ◽  
Difference In Differences ◽  
Data Set ◽  
Family Control ◽  
Comprehensive Data

Estimating difference-in-differences models on a comprehensive data set of Italian companies, we provide novel insights into the literature on political uncertainty and firm investment. We first establish thatlocalpolitical uncertainty leads to declining investment. Next, we show thatfamily controlneutralizes this effect: Family firms are more likely than other firms to invest during politically uncertain times, especially when operating in industries dependent on public spending and/or managed by family members. Finally, we document that this investment resilience of family firms under political uncertainty translates into significantly greater profitability and growth.

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