Christian Keuschnigg
Title
Prof. em. Dr.
Last Name
Keuschnigg
First name
Christian
Email
christian.keuschnigg@unisg.ch
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Item type:Publication, Profit Taxation, Innovation and the Financing of Heterogenous Firms(2012-04-10); Ribi, EvelynInnovative firms are frequently credit constrained and tend to earn an above normal return on capital. This paper considers a discrete R&D decision that splits firms into innovative and standard ones. Active intermediaries can facilitate access to credit and improve capital allocation. We find that (i) financial development boosts innovation and welfare; (ii) ACE and cash-flow taxes are neutral with respect to user cost and standard firm investment but restrict constrained investment and harm innovation and welfare; (iii) an ACE tax is less harmful than an equal yield cash-flow tax although they are equivalent in perfect capital markets; (iv) a self-financed R&D tax credit redistributes towards constrained firms and promotes innovation and welfare; (v) revenue neutral tax cut cum base broadening similarly boosts innovation and welfare.Type:discussion paper - Some of the metrics are blocked by yourconsent settings
Item type:Publication, Business Taxation, Corporate Finance and Economic Performance(2010-05-03); Ribi, EvelynThis survey of recent research in corporate finance discusses how business taxes, subsidies as well as a country's institutional development affect several important decision margins of heterogeneous firms. We argue that innovative firms, as a result of agency problems between insiders and outside investors, are most frequently finance constrained. We discuss how profit taxes reduce investment of constrained firms by their effect on cash-flow, and of unconstrained firms by their effect on the user cost of capital. Moreover, tax reform as well as tax financed R&D subsidies can enhance aggregate investment, innovation and efficiency by implicitly redistributing profits towards constrained firms where capital earns the highest return. We argue that the corporate legal form improves firms' access to external funds. We then explain the firms' choice between venture capital and bank financing and discuss how business taxation can affect venture capital financing on both the extensive and intensive margins. Finally, we review theory and evidence on how corporate finance may shape a country's comparative advantage in innovative industries as well as aggregate labor market performance when part of firms are finance constrained.Type:discussion paper