Does Brazilian allowance for corporate equity reduce the debt bias? Evidences of rebound effect and ownership-induced ACE clientele

Portal, Márcio Telles; Laureano, Luís

doi:10.1016/j.ribaf.2016.12.005

Cited by 5 publications

(7 citation statements)

References 65 publications

(74 reference statements)

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“…Jéfferson Augusto Colombo / Paulo Renato Soares Terra heterogeneity in tax preferences among shareholders (Portal & Laureano, 2017). We also provide new evidence that overall taxation (firm-level plus shareholder-level) is an essential factor driving payout policy, and thus we contribute to a growing body of literature concerning taxes and corporate decisions (see, e.g., Colombo & Caldeira, 2018;Graham, Hanlon, Shevlin, & Shroff, 2017).…”

Section: And Clientele Effects Induced Bymentioning

confidence: 59%

“…Second, as a reflection of potential measurement problems, we create a variable that measures the ratio between IOE distributed and the maximum allowed by law (IOE_IOE*), which permits more precise measurement of the size of the tax benefit obtained by each firm. Finally, by exploring the heterogeneity in the tax rate on IOE income according to the shareholder's identity, we contribute to the debate about the interplay between payout policy and agency problems (Chang, Kang, & Li, 2016;Mulyani, Singh, & Mishra, 2016), the role of ownership identity in shaping corporate outcomes (Alhababsah, 2019), and clientele effects induced by heterogeneity in tax preferences among shareholders (Portal & Laureano, 2017). Importantly, our results indicate that overall taxation (firm-level plus shareholder-level) is a key factor driving payout policy.…”

Section: Introductionmentioning

confidence: 83%

“…Concerning emerging markets, Mulyani et al (2016) examine the roles of dividends and leverage in mitigating agency problems within family firms in Indonesia and find that, compared to non-family firms, family firms tend to maintain lower dividend payouts and higher leverage. Chang et al (2016) study institutional ownership use of dividend payouts as a monitoring tool to mitigate firms' agency problems and find support for the role of dividend Jéfferson Augusto Colombo / Paulo Renato Soares Terra payments as a monitoring device under high agency costs, consonant with explanations based on the potentially conflicting interests of controlling shareholders (Portal & Laureano, 2017).…”

Section: Introductionmentioning

confidence: 88%

“…Such firms may be and often are destroying value for their shareholders regarding foregone tax savings. The literature discusses several possible explanations for the limited use of IOE payments in Brazil: i) formed habits of firms and investors (Carvalho, 2003); ii) lack of more detailed regulations on the subject (Costa, Martins, Sousa, & Cardoso, 2004;Silva, Pinto, Motta, & Marques, 2006); iii) ignorance on the part of certain public firms in the computation of the amount and imputation of IOE (Costa et al, 2004); iv) risk of transitory legislation (Carvalho, 2003); v) lack of standardization in accounting treatment and disclosure of IOE (Silva et al, 2006); vi) characteristics exclusively inherent to the controlling shareholders (Portal & Laureano, 2017;Rangel & Silva, 2007); vii) lack of academic research and technical publications (Silva et al, 2006); and viii) taxation (Boulton et al, 2012;Zagonel, Terra, & Pasuch, 2018).…”

Section: Payout Policy In the Recent Brazilian Literature IVmentioning

confidence: 99%

See 3 more Smart Citations

Interest on Equity Versus Dividends: The role of Shareholder Identity on Corporate Tax Avoidance

Colombo

Terra

2022

RBGN

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Section: And Clientele Effects Induced Bymentioning

confidence: 59%

Section: Introductionmentioning

confidence: 83%

Section: Introductionmentioning

confidence: 88%

Section: Payout Policy In the Recent Brazilian Literature IVmentioning

confidence: 99%

See 2 more Smart Citations

Interest on Equity Versus Dividends: The role of Shareholder Identity on Corporate Tax Avoidance

Colombo

Terra

2022

RBGN

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“…According to Table 1, ACE equally exists in Brazil. Portal and Laureano (2017) analyzed whether the Brazilian model reduces the debt tax bias, specifically whether the effect of the continuous treatment of interest on own capital negatively affects the level of financial leverage, having concluded that this fact increases the debt tax bias. For the authors, ACE produces a rebound effect on the assumption of risk and on capital structure, and it is similar in companies with different levels of financial constraints, and they warn that there may be an "ACE clientele effect" due to the heterogeneity in shareholders' tax preferences.…”

Section: The Tax Factor In Financing Decisions: Some Empirical Studiesmentioning

confidence: 99%

Use of the tax benefit of conventional remuneration of share capital by Portuguese companies

Cruz

Soares

2022

Rev. contab. finanç.

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This article aimed to analyze the use of the tax benefit of conventional remuneration of share capital (CRSC) by Portuguese companies and perceive the influence of tax policies on their financing decisions. Most of the studies are based on the relationship between financing through debt capital and taxation, in which evidence is found that tax benefits influence the capital structure of companies. There is a lack of studies in Portuguese companies. The article is relevant as it adds the increase in capital variable, because in some countries, particularly Portugal, there are also tax incentives through the own-capital financing route. Thus, this investigation provides results of Portuguese companies choosing own-capital financing before and after tax changes that incentivize its use. The empirical study was conducted through a survey questionnaire, using a sample composed of 324 Portuguese companies with economic activity. The article contributes to the study of the relationship between own-capital financing and the existing tax law in Portugal. The tax benefit of CRSC has not been enough for companies to alter their financing policy when they have to choose between resorting to debt capital and injecting new funds through capital holders. However, this incentive has led to a reduction in debt capital, through its conversion into capital, and an increase in capital through the incorporation of earnings generated, with both these practices potentially representing tax planning opportunities. Despite there being the perception that the acceptance of interest as a tax expense favors company financing through debt capital, there is recognition that this benefit incentivizes the capitalization of companies and their financing through own capital, as an alternative to debt capital, especially in medium-sized companies.

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Utilização do benefício fiscal da remuneração convencional do capital social pelas empresas portuguesas

Cruz

Soares

2022

Rev. contab. finanç.

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RESUMO O objetivo deste artigo foi analisar a utilização do benefício fiscal da remuneração convencional do capital social (RCCS) pelas empresas portuguesas e percepcionar a influência das políticas fiscais nas suas tomadas de decisão de financiamento. A maioria dos estudos assenta na relação do financiamento por capitais alheios com a fiscalidade, em que se encontraram evidências de que os benefícios fiscais influenciam a estrutura de capitais das empresas. Existe ausência de estudos em empresas portuguesas. O artigo é relevante ao acrescentar a variável do aumento de capital, porque em alguns países, em particular Portugal, há incentivos fiscais, também, pela via do financiamento através de capitais próprios. Desse modo, esta investigação proporciona resultados da opção pelas empresas portuguesas pelo financiamento por capitais próprios antes e após alterações fiscais que incentivam sua utilização. O estudo empírico foi realizado através de inquérito por questionário, sendo a amostra composta por 324 empresas portuguesas com atividade económica. O artigo contribui para o estudo da relação do financiamento pela via dos capitais próprios com a lei fiscal existente em Portugal. O benefício fiscal da RCCS não tem sido suficiente para as empresas alterarem sua política de financiamento quando têm de optar entre recorrer a capital alheio e efetuar novas entradas pelos detentores de capital. No entanto, esse incentivo tem proporcionado a redução do capital alheio, através da sua conversão em capital, e o aumento do capital pela incorporação do lucro gerado, podendo essas práticas constituírem oportunidades de planeamento fiscal. Apesar de existir a percepção que a aceitação dos juros como gasto fiscal favorece o financiamento das empresas por meio de capitais alheios, há o reconhecimento que esse benefício incentiva a capitalização das empresas e o seu financiamento através de capitais próprios, em alternativa a capitais alheios, sobretudo nas médias empresas.

show abstract

Does Brazilian allowance for corporate equity reduce the debt bias? Evidences of rebound effect and ownership-induced ACE clientele

Cited by 5 publications

References 65 publications

Interest on Equity Versus Dividends: The role of Shareholder Identity on Corporate Tax Avoidance

Interest on Equity Versus Dividends: The role of Shareholder Identity on Corporate Tax Avoidance

Use of the tax benefit of conventional remuneration of share capital by Portuguese companies

Utilização do benefício fiscal da remuneração convencional do capital social pelas empresas portuguesas

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