Valuing the Interest Tax Shield in the Central European Economies: Panel Data Approach

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F04130081%3A_____%2F22%3AN0000035" target="_blank" >RIV/04130081:_____/22:N0000035 - isvavai.cz</a>

Result on the web

<a href="https://doi.org/10.7441/joc.2022.02.03" target="_blank" >https://doi.org/10.7441/joc.2022.02.03</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.7441/joc.2022.02.03" target="_blank" >10.7441/joc.2022.02.03</a>

Result language

angličtina

Original language name

Valuing the Interest Tax Shield in the Central European Economies: Panel Data Approach

Original language description

Capital structure is one of the most frequently discussed issues within Corporate Finance Theory. Optimizing the capital structure and value of the tax shield through the evaluation of its interests can lead to the increasing value of the enterprise, followed by the rising competitiveness and flexibility. The aim of this study is to provide a novel look at the value of the interest tax shield and its determinants in the emerging economies of the Visegrad Four. The model was created on a net sample of nearly 7,000 profitable enterprises between 2015 and 2019 using a one-way fixed effects model of panel data. Regional model results show five main determinants of the debt tax shield (Tangibility, Current Ratio, Gearing, Cost of debt and Size). Others, such as non-debt tax shield, business growth or profitability, are regional, and their impact varies depending on the economic conditions of the countries. The direction of influence of the main determinants indicates that, contrary to the assumed trade-off theory, profitable companies manage the capital structure and the value of tax shield according to the pecking order or modified pecking order theory. The tax shield is made up mostly of interest on short-term loans, which increases the risk of financial distress. There is a hierarchy of funding sources, from trade credit, through shortterm loans, to long-term loans, which are used in the analysed firms to the smallest extent. The structure of liabilities may be considered another determinant of the debt tax shield.

Czech name

—

Czech description

—

Type

J_imp - Article in a specialist periodical, which is included in the Web of Science database

CEP classification

—

OECD FORD branch

50200 - Economics and Business

Project

—

Continuities

N - Vyzkumna aktivita podporovana z neverejnych zdroju

Publication year

2022

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Name of the periodical

JOURNAL OF COMPETITIVENESS

ISSN

1804-171X

e-ISSN

1804-1728

Volume of the periodical

14

Issue of the periodical within the volume

2

Country of publishing house

CZ - CZECH REPUBLIC

Number of pages

19

Pages from-to

41-59

UT code for WoS article

000822355300002

EID of the result in the Scopus database

2-s2.0-85135435636