Estimados profesores,

Este lunes 30 de mayo se llevará a cabo la vigésima novena sesión del Seminario Interno de FEN donde se exponen trabajos en progreso de académicos y avances de tesis de estudiantes.

En esta ocasión se presentará "Firm Financing in Chile After the 2014-15 Tax Reform: Debt of Equity?"

El seminario se llevará a cabo a las 13:00 hrs en la sala T1002 de la FEN. Se solicita confirmar asistencia con Juanita Castillo al correo jcastillo@unegocios.cl a más tardar el día viernes 27 de mayo a las 13:00 horas, ya que el seminario contempla almuerzo.

Atentos saludos,

Dirección de Investigación FEN

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Título - Firm Financing in Chile After the 2014-15 Tax Reform: Debt of Equity?

Autor - Juan Pablo Torres - Académico FEN

Abstract - This paper analyzes the effects of the 2014-15 Chilean tax reform on firms’ incentives to retain earnings and to finance their operations with equity versus debt. The analysis comprises a comparison with the situation pre-reform to draw conclusions with regards to firm’s valuation. The approach used consists of analyzing the effects of the tax reform on the cash flows received by investors. Although the final effect is specific to the firm and the investor, as final cash flows depend on the firm’s dividends payout ratio and each investor’s personal income tax rate, results show that in general the reform lessens the incentives of firms to retain earnings. Also, simulations show that the majority of firms would choose the accrued-based system and if that is not possible will choose debt over equity. The cash-based system becomes the preferred option only when elusion (or tax avoidance) is possible.