EFFECT OF TAX ON CORPORATE FINANCIAL DECISIONS

Abstract

Puropse: The purpose of this thesis is to study “Effect of Taxation on Corporate Financial Decisions”. It discusses the basic characterization of corporate income tax and focus of the analyses is corporate decision which is further categorized into three core corporate decisions for interview purpose: Investment Decision, Financial Decisions and Dividend Decision. The reason to choose this topic is to that the tax has become crucial element of business whether it’s a small company or a large organization, it is subject to taxation. Methodology/Sample: The study involved use of questionnaire filled by 50 respondents from financial sector of media industry of Pakistan and structured interviews from tax experts and professionals.. To analyze the data, Regression, ANOVA and Correlation tests were applied. Findings: The analysis and results clearly shows that tax has great effect on corporate financial decisions. The movement of tax rate influences corporate decisions and further companies tend to avoid taxation through various means. This research supports the fact that the companies with high tax charges tend to pursue policies that give them tax benefits. Practicle Implications: The outcome of the research will help in understanding the factors that influence corporate decisions and how movement of tax impacts financial decisions.