Debt Maturity and Tax Avoidance

Bibliographic Data

ID19447410
AuthorsPetya Platikanova (0000-0003-0567-9705, ESADE – Ramon Llull University, Barcelona, Spain, corresponding author)
Year2017
Volume26
Issue1
Pages97-124
Publication date2017-01-02
Open AccessNo
TypeARTICLE
VenueEuropean Accounting Review (JOURNAL)
Journal identifiersISSN: 0963-8180 • E-ISSN: 1468-4497
PublisherInforma UK Limited (PUBLISHER • GB)
DOI10.1080/09638180.2015.1106329
OpenAlexW2193319909
LanguageEN
Citations received2
References cited48

This study proposes and empirically tests the argument that creditors are likely to extend debt with a shorter maturity to tax-avoiding firms so that they can frequently re-evaluate tax-related risk in debt contracting. Using effective tax rates and uncertain tax benefits as a proxy for tax avoidance, I find that tax-avoiding firms have a larger proportion of short-maturity debt compared to other firms. The empirical findings further show that firms with unsustainable tax positions and with subsidiaries in tax-haven countries are more likely to employ short-maturity debt. Collectively, the empirical findings suggest that frequent debt renegotiations increase the exposure of tax-avoiding firms to credit supply shocks, contributing to their higher demand for cash

Business · Corporate Tax · Debt · Double taxation · Economics · Monetary economics · Political science · Tax avoidance · Corporate Finance and Governance · Corporate Taxation and Avoidance · Fiscal Policy and Economic Growth · Finance

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