Risk Management and the Tax Allocation Reserve
Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
This paper aims to investigate if there exist a relation between the use of the tax allocation reserve and financial risk management among Swedish corporations. In order to perform the study the literature on risk management is reviewed. The fields within the risk management theory that have an impact on the incentives to use the tax allocation reserve is identified and described. A binary logit model is applied to empirically test if a statistical relationship between the use of the tax allocation reserve and risk management exist. To determine the use of the tax allocation reserve a binary choice variable is created and tested against the theories of transaction costs, coordination of financing and investment policies and the reduction of corporate tax. The model is applied on financial statement data of firms operating in Sweden from 2009 to 2011. Reported results reveal evidence that there exist a statistical relationship between the use of the tax allocation reserve and the theories of transaction costs and the coordination of financing and investment policies, and suggest that their occur risk management related activities in the application of the tax allocation reserve among firms operating in Sweden. The findings also suggest that tax incentives impact the utilization of the tax allocation reserve.
Place, publisher, year, edition, pages
2016. , 43 p.
Tax allocation reserve, Risk management, Transaction costs, Corporate tax, Coordination of financing and investment policies
Economics and Business
IdentifiersURN: urn:nbn:se:kth:diva-189220OAI: oai:DiVA.org:kth-189220DiVA: diva2:944472