Can Taxes Encourage Better Corporate Behavior?

2016-01-05 The Atlantic

The Atlantic explains that regulations aren’t the only option the government has for discouraging companies from taking on too much risk, referring to research by Alexander Ljungqvist of New York University (affiliated to IFN), Liandong Zhang of City University of Hong Kong, and Luo Zuo of Cornell. Their research show that lowering taxes didn’t have the expected effect of inducing more risk. "The authors conclude that this may be the case because regulators or investors also weigh in, dissuading companies from taking on risky new endeavors. In other words, taxes can be a blunt tool for curbing risk-taking, but they don’t seem to be useful for encouraging it."

Research Institute of Industrial Economics, Grevgatan 34 - 2 fl, Box 55665, SE-102 15 Stockholm, Sweden | Phone: +46-(0)8-665 45 00 | info@ifn.se