The Resource Lesson learned by the new Italian Law on Limited Tax Shield on Debt : much ado about nothing

Lesson learned by the new Italian Law on Limited Tax Shield on Debt : much ado about nothing

Label
Lesson learned by the new Italian Law on Limited Tax Shield on Debt : much ado about nothing
Title
Lesson learned by the new Italian Law on Limited Tax Shield on Debt : much ado about nothing
Creator
Subject
Language
eng
Summary
Corporate finance management rules are written under the assumption that financing costs are fully deductible from taxable income. If this assumption is relaxed, such rules need to be revised. The authors review traditional management tools and propose a new set of guidelines for financial management. The tax reform introduced in Italy, which creates a partial tax deduction for financing costs, offers a case study to measure the impact of such rules on a firm's profitability. The general wisdom among academics and practitioners was of a further pressure on economic performance of firms due to a higher tax burden. The authors checked the effect of the new rules on a sample of 2,025 large Italian firms. They did not find a deep impact. Effects are limited to one sector, characterized by operating profitability on sample mean and financial leverage below sample mean. The authors advise policy-makers to fine-tune this regulation or to abandon it
Citation source
In: Intertax. - Alphen aan den Rijn. - Vol. 39 (2011),
http://library.link/vocab/creatorName
  • Lanzavecchia, A
  • Tagliavini, G
Geographic coverage
  • European Union
  • Europe
Language note
English
http://library.link/vocab/subjectName
  • corporate finance
  • interest deduction
Label
Lesson learned by the new Italian Law on Limited Tax Shield on Debt : much ado about nothing
Instantiates
Publication
Label
Lesson learned by the new Italian Law on Limited Tax Shield on Debt : much ado about nothing
Publication

Library Locations

    • IBFD Library AmsterdamBorrow it
      Rietlandpark 301, Amsterdam, 1019 DW, NL
      52.3736660 4.9336932
Processing Feedback ...