Why Don ’ t Firms Claim their Tax Refunds ? Evidence from Private Debt Contracts

@inproceedings{Saavedra2016WhyD,
  title={Why Don ’ t Firms Claim their Tax Refunds ? Evidence from Private Debt Contracts},
  author={D. Saavedra},
  year={2016}
}
  • D. Saavedra
  • Published 2016
  • A puzzle is why a large proportion of firms eligible for income tax refunds do not file claims for such refunds on a timely basis. I hypothesize that firms with private information about higher future profitability and seeking debt financing forgo immediate use of provisions that allow the carryback of net operating losses as a signaling device to separate from firms with lower future profitability in order to obtain more favorable borrowing terms. Firms expecting lower profitability are… CONTINUE READING

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