Quotation Frühwirth, Manfred, Kobialka, Marek. 2010. The Impact of Imputed Interest on Equity Provisions on the Capital Structure of Austrian Firms. Euro-Mediterranean Economics and Finance Review 5 (3): 55-70.




The goal of this article is to analyze the impact of imputed interest on equity provisions (equity tax shields), that prevailed in Austria from 2000 to 2004, on the capital structure of firms. Although the Austrian system granted only a rather small dose of equity tax shields, we find that the tax regime achieved its goal to increase the equity ratios. We also see that the government can control the companies' capital structures by changing the imputed interest rate on equity. Moreover, we can confirm the hypothesis of De Angelo/Masulis (1980) that non-debt tax shields act as a substitute for debt tax shields also in imputed interest on equity tax systems. It is interesting to see that, even though imputed interest on equity can be used by the government to influence the capital structure, non-debt tax shields show a higher significance than the imputed interest on equity. We also find strong and highly significant autocorrelation of the capital structure showing that the capital structure is not adjusted to a target level but rather the consequence of historical decisions.


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Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Euro-Mediterranean Economics and Finance Review
Language English
Title The Impact of Imputed Interest on Equity Provisions on the Capital Structure of Austrian Firms
Volume 5
Number 3
Year 2010
Page from 55
Page to 70
Reviewed? Y


Frühwirth, Manfred (Details)
Kobialka, Marek (Former researcher)
Institute for Finance, Banking and Insurance IN (Details)
Research areas (ÖSTAT Classification 'Statistik Austria')
5300 Economics (Details)
5305 Bank management (Details)
5327 Accounting (Details)
5349 Business taxation (Details)
5358 Corporate finances (Details)
5360 Financial mathematics (Details)
5361 Financial management (Details)
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