Foreign Tax Credit Limitations and Capital Structure Decisions
研究外国税收抵免限制如何影响企业资本结构，发现约束性限制会降低国内利息扣除的税收优惠，促使企业用股权融资替代国内债务。
This paper extends prior studies by Collins and Shackelford [1992] and Froot and Hines [1995] that investigate the impact of foreign tax credit (FTC) limitations on firms' capital structure decisions. Binding FTC limitations reduce the marginal tax benefit of domestic interest deductions and provide incentives for firms to substitute equity financing for domestic debt. Collins and Shackelford [1992] document a positive relation between the impact of FTC limitations and changes in firms' preferred stock accounts during 1986-89. Froot and Hines [1995] (unable to isolate domestic debt changes) document that firms with excess FTCs decreased their worldwide debt growth in 1986-91, but they do not find evidence that FTC limitations influence a shift away from debt and into preferred stock financing. Thus, these two studies find conflicting evidence regarding whether FTC limitations influence firms to use preferred stock as a financing vehicle, and neither study provides direct evidence regarding a decline in domestic debt or a potential common