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Proxies for the corporate marginal tax rate

Publication ,  Journal Article
Graham, JR
Published in: Journal of Financial Economics
January 1, 1996

This paper focuses on how best to measure the corporate marginal tax rate, which is an important input into financial analysis of the cost of capital, financing policy, corporate hedging, and corporate reorganizations. The results indicate that the simulated tax rate used by Shevlin (1990) and Graham (1996), although difficult to calculate, is the best available proxy for the 'true' marginal tax rate. If the simulated rate is unavailable, an easy-to-calculate trichotomous variable or the statutory marginal tax rate (which captures the progressivity in the tax rate schedule) are reasonable alternatives, better than most commonly used tax variables.

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Published In

Journal of Financial Economics

DOI

ISSN

0304-405X

Publication Date

January 1, 1996

Volume

42

Issue

2

Start / End Page

187 / 221

Related Subject Headings

  • Finance
  • 3801 Applied economics
  • 3502 Banking, finance and investment
  • 1606 Political Science
  • 1502 Banking, Finance and Investment
  • 1402 Applied Economics
 

Citation

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Graham, J. R. (1996). Proxies for the corporate marginal tax rate. Journal of Financial Economics, 42(2), 187–221. https://doi.org/10.1016/0304-405X(96)00879-3
Graham, J. R. “Proxies for the corporate marginal tax rate.” Journal of Financial Economics 42, no. 2 (January 1, 1996): 187–221. https://doi.org/10.1016/0304-405X(96)00879-3.
Graham JR. Proxies for the corporate marginal tax rate. Journal of Financial Economics. 1996 Jan 1;42(2):187–221.
Graham, J. R. “Proxies for the corporate marginal tax rate.” Journal of Financial Economics, vol. 42, no. 2, Jan. 1996, pp. 187–221. Scopus, doi:10.1016/0304-405X(96)00879-3.
Graham JR. Proxies for the corporate marginal tax rate. Journal of Financial Economics. 1996 Jan 1;42(2):187–221.
Journal cover image

Published In

Journal of Financial Economics

DOI

ISSN

0304-405X

Publication Date

January 1, 1996

Volume

42

Issue

2

Start / End Page

187 / 221

Related Subject Headings

  • Finance
  • 3801 Applied economics
  • 3502 Banking, finance and investment
  • 1606 Political Science
  • 1502 Banking, Finance and Investment
  • 1402 Applied Economics