The effect of tighter tax loss offsetting rules on firms' innovation: evidence from South Korea

IF 2.7 4区 管理学 Q2 BUSINESS
Jae Yeon Sim, Natalie Kyung Won Kim, Jeong-Taek Kim
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Abstract

Purpose

This study investigates how the introduction of a stricter loss carryforward offset rule affects firms' innovation.

Design/methodology/approach

This study investigates the overall impact of a Korean tax reform that introduced a tighter loss deduction through a difference-in-differences approach and regression discontinuity design.

Findings

This study finds that firms subject to the more restrictive tax loss offset provisions tend to file fewer patents than firms not subject to the provision. The authors further find that this effect is more pronounced for firms with high R&D intensity, more investment opportunities and weaker monitoring mechanisms.

Research limitations/implications

The results of this study suggest that more restrictive loss carryforward provisions may deter firms from innovation. This study contributes to the literature on the impact of tax loss rules, the effect of tax policies on investments and the real effects of corporate taxation.

Practical implications

This study sheds light on the debate of the consequences of a Korean tax reform. Specifically, the authors examine whether a stricter tax loss offset policy indeed dampens corporate innovation.

Originality/value

This study exploits a unique and infrequent exogenous tax policy change. The South Korean tax reform creates a treatment group of large firms that were affected by the tax reform, and a control group of small and medium-sized firms that were unaffected. This study takes advantage of this setting to examine the research question.

更严格的税收损失抵消规则对企业创新的影响:来自韩国的证据
目的研究引入更严格的亏损结转抵消规则对企业创新的影响。本研究调查了韩国税制改革的总体影响,该改革通过差异中的差异方法和回归不连续设计引入了更严格的损失扣除。本研究发现,受到更严格的税收损失抵消条款约束的公司比没有受到该条款约束的公司申请的专利更少。作者进一步发现,对于研发强度高、投资机会多、监管机制弱的企业,这种效应更为明显。研究的局限性/启示本研究的结果表明,更严格的亏损结转规定可能会阻碍企业的创新。本研究对税收损失规则的影响、税收政策对投资的影响以及企业税收的实际影响等方面的文献做出了贡献。本研究揭示了关于韩国税制改革后果的争论。具体而言,作者考察了更严格的税收损失抵消政策是否确实抑制了企业创新。原创性/价值本研究利用了一种独特且不常见的外生税收政策变化。韩国税制改革创建了一个由受税制改革影响的大企业组成的治疗组,以及一个由未受影响的中小企业组成的对照组。本研究利用这种设置来检验研究问题。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
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来源期刊
CiteScore
5.90
自引率
14.80%
发文量
206
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