Investment behaviour and government tax policy: a survey of the largest UK firms

Article Abstract:

The results of a postal survey which investigated the impact of changes in tax rates and allowances on capital expenditure decisions by the UK's largest industrial companies are presented. Managerial perceptions of how the magnitude and timing of fixed investments, which account for a large share of total investment in the UK, would have been affected if the new tax provisions had applied at the time are examined and the reasons for such responses are analyzed. Specific focus is placed on the role of tax in capital budgeting.

Analysis, Capital investments, Tax rates

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Tax, corporate behaviour and the foreign income dividend scheme

Article Abstract:

The effects of UK taxes on the gearing and dividend decisions of companies are examined using the model proposed by DeAngelo and Masulis. This model investigates how the availability of corporate tax shield substitutes for debt influences corporate gearing decisions. Findings indicate that the UK's advance corporate tax system, through the Foreign Income Dividend program, will bolster the gearing ratios of the companies subject to the changes in the tax regime.

United Kingdom, Research, Dividends, Corporate income taxes, Tax policy, Foreign source income taxation

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The Capital Budgeting Behaviour and Corporate Characteristics of Capital-Constrained Firms

Article Abstract:

Capital-constrained firms must ration their capital between investment opportunities. The methodology of such a rationing policy is evaluated. Unsettling surveys suggest that management limits the number of projects reviewed. Society may not get the optimal investment allocation from such a rationing policy. Also, empirical studies of capital budgeting decisions show that theory does not accurately portray reality in this instance.

Methods, Supply and demand, Study and teaching, Investment analysis, Securities analysis, Capital

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