Code for: Capital Gains Taxes and Real Corporate Investment: Evidence from Korea

Principal Investigator(s): View help for Principal Investigator(s) Terry (Seok Min) Moon, University of British Columbia

Version: View help for Version V1

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code			04/18/2022 03:59:PM
README.pdf	application/pdf	276.4 KB	04/18/2022 12:25:PM

Project Citation:

Moon, Terry (Seok Min). Code for: Capital Gains Taxes and Real Corporate Investment: Evidence from Korea. Nashville, TN: American Economic Association [publisher], 2022. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2022-07-19. https://doi.org/10.3886/E164361V1

Project Description

Summary:

This paper assesses the effects of capital gains taxes on investment in Korea, where capital gains tax rates vary at the firm-level by firm size. Following a reform in 2014, firms with a tax cut increased investment by 34 log points and issued more equity by 9 cents per dollar of lagged revenue, relative to unaffected firms. Additionally, the effects were larger for firms that appeared more cash-constrained or went public after the reform. Taken together, these findings are consistent with the “traditional view” predicting that lower payout taxes spur equity-financed investment by increasing marginal returns on investment.

Scope of Project

Subject Terms: propreitary firm financial data

JEL Classification:
      G11 Portfolio Choice; Investment Decisions
      G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
      H25 Business Taxes and Subsidies including sales and value-added (VAT)
      O16 Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

Geographic Coverage: Republic of Korea

Time Period(s): 1/1/2009 – 12/31/2019

Collection Date(s): 10/30/2017 – 5/15/2020

Universe: publicly listed and private companies in South Korea

Data Type(s): administrative records data

Methodology

Data Source: Korea Listed Companies Association
Korea Information Service
Wharton Research Data Services

Unit(s) of Observation: firm

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Published Versions

V1 [2022-07-19]

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DDI 2.5

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