ISSN: 2225-8329
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This study provides a review of the theoretical and empirical literature examining the trade-off between debt and non-debt tax shields and of its consequences for the corporate capital structure. The systematic analysis of the results of 46 studies supports the existence of a substitution relationship between debt and non-debt tax shields, as suggested by the hypothesis of DeAngelo & Masulis (1980). However, conflicting evidence on such trade-off remains, as well as on its consequences for a firm’s capital structure. More recent research also highlights the importance of considering several moderating factors when examining the relationship between debt and non-debt tax shields. This study suggests potential avenues for future research.
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In-Text Citation: (Gabrielli, 2023)
To Cite this Article: Gabrielli, A. (2023). The Debt and Non-Debt Tax Shields Trade-Off: A Review. International Journal of Academic Research in Accounting Finance and Management Sciences, 13(1), 88–103.
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