| dc.description.abstract | This thesis aims to investigate the effects of a corporate income tax rate change on financial
corporations’ capital structure. We perform two case studies on financial corporations located
in Austria and the Netherlands to answer this question. These studies take place over a decade
from 2000 – 2010 using nine OECD-countries as controls. For the estimation of the effect of
corporate taxation, we apply the synthetic control method. We construct a counterfactual
outcome for both countries, where no change to the corporate income tax rate occurred. We
do this by constructing a weighted average of control countries unaffected by such a change to
the corporate income tax rate.
We find that both Austrian and Dutch financial corporations on average lowered their debt-toequity
ratios a little over 30 % compared to its synthetic control. Our results indicate that there
is a positive effect of a change to the corporate income tax rate on the capital structure of
financial corporations.
To test the significance of our estimates we conduct placebo tests to see if we get results of
similar magnitude when considering countries that did not implement such tax reforms. The
results of these test are however ambiguous, where we find an effect of taxes on capital
structure to be significant when conducting a one-sided hypothesis test, but we do not when
conducting a two-sided test. Our results are also robust when we place different restrictions on
the synthetic control. The fact that we get results of similar magnitude for both Austria and
the Netherlands assures us that our results are quite robust. Consequently, we find that there is
a strong indication of corporate income taxes positively affecting the capital structure of
financial corporations. | nb_NO |
