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| Author: | Manzon, G. Jr. Porter, T. Potter, M. |
| Title: | Evidence on the effect of taxes on firms' decisions to retire debt early |
| Journal: | Journal of Financial Research
1996 : FALL, VOL. 19:3, p. 327-338 |
| Index terms: | FINANCE TAXATION RESEARCH |
| Language: | eng |
| Abstract: | The authors examine the effect of marginal tax rates on the decision to retire debt early. Other factors that have been linked to the debt retirement decision are also investigated, including leverage adjustment and the value associated with the immediate recognition of a loss for tax purposes on early retirement. Results indicate that firms that retire debt early have lower marginal tax rates than firms that do not retire debt early. This finding is consistent with the proposition that firms are motivated to retire debt early by an incentive to reduce tax shields that cannot be used efficiently. |
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