Earticle

초록

영어

Corporations world over have amassed record levels of cash on their balance sheets. We study the effects of a unique tax reform in South Korea in 2015 that sought to stem the tide of corporate cash accumulation. Firms with shareholder’s equity above 50B Won, or that were part of larger business groups (Chaebol ), had to pay a sur-tax of 10% on any earnings above a threshold that were saved rather than invested or paid out to shareholders. Employing a difference-in-difference design, we find that the treated firms cut cash savings and instead direct earnings mainly towards new investments, resulting in stronger revenue growth, as well as towards higher wage increases and shareholder payouts. We find no evidence of reduced profitability, suggesting that these marginal investments were profitable. An event study analysis shows that shareholders reacted positively to firms being subject to the surtax, implying that shareholders viewed benefits from discouraging savings to outweigh the costs from a potentially higher tax bill. These findings suggest that firms were underinvesting and saving excessively prior to the tax change.

목차

Abstract
1 Introduction
2 Institutional background
3 Data and Empirical Strategy
3.1 Empirical strategy
3.2 Data and Sample construction
3.3 Main variables and Summary statistics
4 Main Results
4.1 Effect on cash
4.2 Effect on investment and wages
4.3 Effect on payout policy
4.4 Effects on residual cash use
5 Robustness
6 Consequences for distress risk
7 Valuation and operating performance
8 Differential Timing of Effects
9 Firm heterogeneity
9.1 The role of tangibility
9.2 The role of governance
10 Conclusion
References

키워드

저자

• Hwanki Brian Kim [ Baylor University ]
• Woojin Kim [ Seoul National University ]
• Mathias Kronlund [ University of Illinois at Urbana-Champaign ]

참고문헌

발행기관

간행물

표지보기 관심저널 등록

• 간행물명

  한국재무학회 학술대회

• 간기

  부정기

• 수록기간

  2006~2024

• 십진분류

  KDC 325 DDC 330