The Impact of Corporate Effective Tax Rates on the Financials of Companies

This paper focuses on the importance of tax rates (especially effective tax rates) on companies. Author tries to find out if there are any significant dependencies between the effective tax rates and other explanatory variables on corporate behavior. According to first results, it seems to be hard to find for the companies from all over the EU a significant relationship between forward-looking country-level effective tax rates and the real corporate behavior. The financial and investment behavior is illustrated by own constructed indicators based on corporate financials. The data from financials were obtained from the Bureau van Dijk's ORBIS database. The analysis includes more than 800,000 companies and covers years 2003-2011.