Corporate Taxation and Investment.

Abstract

The three essays contained in this dissertation consider the effect of U.S. federal tax policy on the investment behaviors of large, publicly traded firms. Chapter I considers the effect bonus depreciation on physical capital investment. Chapter II tests whether dividend and capital gains taxation impact mergers and acquisitions, a special form of corporation investment. Chapter III documents and analyzes the business investment response to the Domestic Production Activities Deduction. In sum, the essays find that, over the last decade, corporate taxation and changes in corporate tax policies have had large impacts on the investment decisions of US corporations.