Corporate tax aggressiveness, outside directors, and debt policy: An empirical analysis

Publication Type:
Journal Article
Journal of Corporate Finance, 2014, 25 pp. 107 - 121
Issue Date:
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This study examines the influence of corporate tax aggressiveness on corporate debt policy (the debt-substitution effect) and the influence of outside directors on both debt and the debt-substitution effect. Based on a sample of 6967 firm-year observations over the 2001-2010 period, we find that tax aggressiveness is negatively correlated with debt. We also observe a negative correlation between debt and the proportion of outside directors on the board, and find that outside directors magnify the debt-substitution effect. Finally, we obtain similar results in analysis based on firms' debt issuance decisions. © 2013 Elsevier B.V.
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