An Empirical Study On The Impact Of Capital Structure On Corporate Income Tax Burden

Corporate income tax is an important index to measure the level of tax burden of corporates,and also China's second largest tax,after the VAT.The capital structure of corporates is also essential for its development.Analyzing the impact of the capital structure to the corporate income tax burden can help companies know the extent of the impact and help them to choose a more reasonable capital structure.First,I define the concept of capital structure and corporate income tax,and make literature review around the world.Then I analyze the present status of corporate income tax and capital structure in China.On this basis,this paper selects the data of the listed companies from 2001 to 2014 as samples,the corporate income tax burden as explained variable,the ratio of short-term loan?the ratio of long-term loan and the ratio of the biggest shareholder as explanatory variables,the ratio of EBIT and the ratio of tax return as control variables.The lagged ratio of short-term loan and the lagged ratio of the biggest shareholder are selected as the instrumental variables.And the dynamic panel with GMM method is used to make the regression analysis.The empirical analysis verifies the tax shield effect of the liability and finds that the impact of the long-term loan is less than the short-term loan.The ratio of the biggest shareholder is negatively correlated with the corporate income tax burden.After that,this paper sets several dummy variables to represent the industry,and analyzes the different impact among different industries.It is found that there' s no significant differences of the impact of the short-term loan on the corporate income tax among different industries,but there' s very significant differences of the impact of the long-term loan on the corporate income tax among different industries.The tax shield effect of the public companies is the strongest,second is the real estate companies,third is the commercial companies.The tax shield effect of the long-term loan of the industrial companies is the weakest.From the perspective of the loan' s term,the real estate companies' and the public companies' tax shield effect of the long-term loan is stronger than which of the short-term loan,while the industrial companies' and the commercial companies' tax shield effect of the short-term loan is stronger than which of the long-term loan.Finally,on the basis of the conclusion of this paper,I make some suggestions on the capital structure choice of Chinese enterprises,and also put forward some policy suggestions for the regulations related to the capital structure.