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Value of Debt Tax Shields in Colombia: An Empirical StudyRafael Salas PérezUniversidad Tecnologica de Bolivar Juan Gutiérrez RuizUniversidad Tecnológica de Bolívar Ignacio Velez-ParejaMaster Consultores July 28, 2011 Abstract: The Spanish version of this paper can be found http://ssrn.com/abstract=1899685 This paper estimates the value of tax shields, using the discounted cash flow method for 23 major non financial firms listed in the Bolsa de Valores de Colombia (Colombian Stock Exchange) between 2001 and 2010 It shows that this value represents on average between 5.40% and 56.73% out of total firm value depending on discount rate for tax shields and calculation method. It also finds that firms’ average leverage is low relative to other countries. Using Data Panel regressions, it explores the behavior of total value of firms and found no evidence that debt creates value.
Number of Pages in PDF File: 28 Keywords: Debt Tax Shields, Discount Rates, Firm Value, Leverage, Colombia JEL Classification: G12, G32, M21, M41 working papers seriesDate posted: August 31, 2011 ; Last revised: November 9, 2011Suggested CitationContact Information
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