Do tax incentives affect investment quality?

This paper examines the effect of tax incentives in the form of bonus depreciation on investment quality. Using the expiration of tax incentives via bonus depreciation in eastern Germany and a representative panel of West German establishments, we show that bonus depreciation significantly lowers in...

Descripción completa

Detalles Bibliográficos
Autores: Eichfelder, S. (Sebastian)|||/items/4b2d7008-a2a6-4089-b5c2-0db12083a117, Jacob, M. (Martin)|||/items/b4c80971-c877-4230-904c-54573540e482, Schneider, K. (Kerstin)|||/items/0f310055-8435-4f61-9ed3-6ee6d542a41a
Tipo de recurso: artículo
Fecha de publicación:2023
País:España
Institución:Universidad de Navarra
Repositorio:Dadun. Depósito Académico Digital de la Universidad de Navarra
Idioma:inglés
OAI Identifier:oai:dadun.unav.edu:10171/119296
Acceso en línea:https://hdl.handle.net/10171/119296
Access Level:acceso abierto
Palabra clave:Bonus depreciation
Tax incentive
Investment incentive
Investment quality
id ES_9ebed3ddee8531bde0e7ed6bab562e95
oai_identifier_str oai:dadun.unav.edu:10171/119296
network_acronym_str ES
network_name_str España
repository_id_str
spelling Do tax incentives affect investment quality?Eichfelder, S. (Sebastian)|||/items/4b2d7008-a2a6-4089-b5c2-0db12083a117Jacob, M. (Martin)|||/items/b4c80971-c877-4230-904c-54573540e482Schneider, K. (Kerstin)|||/items/0f310055-8435-4f61-9ed3-6ee6d542a41aBonus depreciationTax incentiveInvestment incentiveInvestment qualityThis paper examines the effect of tax incentives in the form of bonus depreciation on investment quality. Using the expiration of tax incentives via bonus depreciation in eastern Germany and a representative panel of West German establishments, we show that bonus depreciation significantly lowers investment quality. The average quality of investments, measured by the responsiveness of future revenue and other proxies for cash flow to current investment, reduces by 15.2–23.8% in the short run and 31.8–41.4% in the long run. Our research suggests that this adverse effect of tax subsidies is greater for jurisdictions with higher tax rates, in times of high unemployment, and for large or low-productivity establishments. Overall, while increasing investment quantity, as shown by prior literature, tax incentives such as bonus depreciation substantially reduce the quality of investments.ElsevierDadun. Depósito Académico Digital Universidad de Navarra20232023-03-2120232023-03-21journal articlehttp://purl.org/coar/resource_type/c_6501info:eu-repo/semantics/articleapplication/pdfhttps://hdl.handle.net/10171/119296reponame:Dadun. Depósito Académico Digital de la Universidad de Navarrainstname:Universidad de NavarraInglésengopen accesshttp://purl.org/coar/access_right/c_abf2info:eu-repo/semantics/openAccessoai:dadun.unav.edu:10171/1192962026-06-21T12:47:57Z
dc.title.none.fl_str_mv Do tax incentives affect investment quality?
title Do tax incentives affect investment quality?
spellingShingle Do tax incentives affect investment quality?
Eichfelder, S. (Sebastian)|||/items/4b2d7008-a2a6-4089-b5c2-0db12083a117
Bonus depreciation
Tax incentive
Investment incentive
Investment quality
title_short Do tax incentives affect investment quality?
title_full Do tax incentives affect investment quality?
title_fullStr Do tax incentives affect investment quality?
title_full_unstemmed Do tax incentives affect investment quality?
title_sort Do tax incentives affect investment quality?
dc.creator.none.fl_str_mv Eichfelder, S. (Sebastian)|||/items/4b2d7008-a2a6-4089-b5c2-0db12083a117
Jacob, M. (Martin)|||/items/b4c80971-c877-4230-904c-54573540e482
Schneider, K. (Kerstin)|||/items/0f310055-8435-4f61-9ed3-6ee6d542a41a
author Eichfelder, S. (Sebastian)|||/items/4b2d7008-a2a6-4089-b5c2-0db12083a117
author_facet Eichfelder, S. (Sebastian)|||/items/4b2d7008-a2a6-4089-b5c2-0db12083a117
Jacob, M. (Martin)|||/items/b4c80971-c877-4230-904c-54573540e482
Schneider, K. (Kerstin)|||/items/0f310055-8435-4f61-9ed3-6ee6d542a41a
author_role author
author2 Jacob, M. (Martin)|||/items/b4c80971-c877-4230-904c-54573540e482
Schneider, K. (Kerstin)|||/items/0f310055-8435-4f61-9ed3-6ee6d542a41a
author2_role author
author
dc.contributor.none.fl_str_mv Dadun. Depósito Académico Digital Universidad de Navarra
dc.subject.none.fl_str_mv Bonus depreciation
Tax incentive
Investment incentive
Investment quality
topic Bonus depreciation
Tax incentive
Investment incentive
Investment quality
description This paper examines the effect of tax incentives in the form of bonus depreciation on investment quality. Using the expiration of tax incentives via bonus depreciation in eastern Germany and a representative panel of West German establishments, we show that bonus depreciation significantly lowers investment quality. The average quality of investments, measured by the responsiveness of future revenue and other proxies for cash flow to current investment, reduces by 15.2–23.8% in the short run and 31.8–41.4% in the long run. Our research suggests that this adverse effect of tax subsidies is greater for jurisdictions with higher tax rates, in times of high unemployment, and for large or low-productivity establishments. Overall, while increasing investment quantity, as shown by prior literature, tax incentives such as bonus depreciation substantially reduce the quality of investments.
publishDate 2023
dc.date.none.fl_str_mv 2023
2023-03-21
2023
2023-03-21
dc.type.none.fl_str_mv journal article
http://purl.org/coar/resource_type/c_6501
dc.type.openaire.fl_str_mv info:eu-repo/semantics/article
format article
dc.identifier.none.fl_str_mv https://hdl.handle.net/10171/119296
url https://hdl.handle.net/10171/119296
dc.language.none.fl_str_mv Inglés
eng
language_invalid_str_mv Inglés
language eng
dc.rights.none.fl_str_mv open access
http://purl.org/coar/access_right/c_abf2
dc.rights.openaire.fl_str_mv info:eu-repo/semantics/openAccess
rights_invalid_str_mv open access
http://purl.org/coar/access_right/c_abf2
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
dc.publisher.none.fl_str_mv Elsevier
publisher.none.fl_str_mv Elsevier
dc.source.none.fl_str_mv reponame:Dadun. Depósito Académico Digital de la Universidad de Navarra
instname:Universidad de Navarra
instname_str Universidad de Navarra
reponame_str Dadun. Depósito Académico Digital de la Universidad de Navarra
collection Dadun. Depósito Académico Digital de la Universidad de Navarra
repository.name.fl_str_mv
repository.mail.fl_str_mv
_version_ 1869414851766386688
score 15.811543

Similares en LA Referencia