| Summary: | 碩士 === 國立政治大學 === 財政研究所 === 103 === Because many companies shift their profits through debt financing, governments had imposed anti-thin capitalization rules one after another to limit the tax deductibility of interest expenses. However, most empirical researches on the effectiveness of the anti-thin capitalization rules are from host countries perspectives. Different from previous literature focusing on how the anti-thin capitalization rule of one country affects capital structures of companies in that country, this paper is from a home country perspective to analyze the effects of the anti-thin capitalization rules on capital structures of Taiwanese listed companies (Electronics manufacturing industry) and their affiliates over the period 2008-2012. This paper subdivides debt into internal debt and external debt on account of the substitution between them so that it would help us to understand financing behavior of companies in depth.
Model 1 and Model 2 are to investigate how anti-thin capitalization rules affect internal debt of companies. Model 3 and Model 4 are to investigate how anti-thin capitalization rules affect external debt of companies. The findings indicate that reclassifying excess interest as dividends reduces a company’s internal debt ratio by 15.45% and increases its external debt ratio by 27.66%. Defining the numerator of the safe haven ratio as total debt reduces a company’s external debt ratio by 14%. Moreover, how the enforcement of the anti-thin capitalization rule affects a company’s external debt ratio depends on the penalty and the definition of the debt measure in the numerator of the safe haven ratio. Finally, if the numerator of the safe haven ratio refers to related-parties debt, a company may still make good use of the tax shields of interest expenses by increasing external debt.
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