Tax Shelters and Corporate Debt Policy

John R. Graham Alan L. Abstract: We gather a unique sample of 44 tax shelter cases to investigate the magnitude of tax shelter activity and whether participating in a shelter is related to corporate debt policy. The average deduction produced by the shelters in our sample is very large, equaling approximately nine percent of asset value. These deductions are more than three times as large as interest deductions for comparable…
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D. Richard Mead Jr. Family Professor of Finance, Fuqua School of Business, Duke University, USA
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From Pace University - Lubin School of Business, NY, USA
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