CORPORATE TAX

Does Corporate Tax affect company's' capital structure and performance?

Table of Contents

CHAPTER NO 1: INTRODUCTION3

Statement of the Problem3

Aim of the Study4

Objectives4

Research Question4

Hypothesis4

CHAPTER NO 2: LITERATURE REVIEW5

Effects on corporate financial structure5

Effects of corporation tax on the allocation of productive resources6

Effects of corporation tax on investment6

Comparison of corporation tax with other capital income6

Corporation Tax and Double Taxation of Dividends7

Corporation Tax and System Unit7

Corporation Tax and Integration System7

System for exemption on corporation tax7

Agency costs and capital structure11

CHAPTER NO 3: RESEARCH DESIGN AND METHODOLOGY13

Data Sources and Research Limitations13

Research Instruments14

Data Types14

Time Scale15

CHAPTER NO 4: DATA ANALYSIS AND CONCLUSION16

Data Analysis16

Conclusion16

CHAPTER NO 1: INTRODUCTION

Statement of the Problem

The study is related to effect of corporate tax on the capital structure and performance of the companies that is the banks listed in the London stock exchange. In this context, capital structure has led to intense debate in the field of financial management for a long time. The basic question of whether a unique combination of equity and debt maximizes firm value, and if so, what factors may affect the company 'S optimal capital structure has been discussed in the literature on capital structure.

The main objective of the corporate financial manager is to make investment decisions and financing. Gains tax allows companies to deduct the companies interest, but not dividends in the calculation of taxable income, adding the company's debt, the structure of capital reduces your tax liability is expected and an increase in your cash flow after taxes. Argument is not tax the income tax, companies pay taxes, but payments interest on the debt to be taxable, and paid in all fairness not, there are always gains an interest enough to make a valuable from the standpoint. That is, the taxable income before interest and taxes are always higher than interest expense, so that interest leads to a reduction of tax Bill. Unless there was a tax on profits of enterprises, rather than individual taxes on corporate securities profitability, value of the company financed the debt will be equal to that in a society of equal all of the capital plus the present value of the interest tax shield. Thus, the tax effect of debt the company recommends the use of as more debt increases the after-tax proceeds go to the owners.

Aim of the Study

The aim of the study is to find the impact of corporate tax on the borrowing levels, capital structure, if the borrowing levels of the companies create any value and also to find the impact of corporate tax on foreign investment attraction.

Objectives

Besides it, the key objectives of the study include to find the relationship of corporate tax with the size and debt equity of the companies.

Research Question

What is the effect of corporate tax on capital structure of listed companies in the UK?

Hypothesis

H1 o: There is a relationship between the corporate taxes with the size of the listed companies in the UK.

H1 o: There is no relationship between the corporate taxes with the size of the listed companies in the ...