{"title":"The effects of tax cuts and financing subsidies on environmentally and financially constrained firms","authors":"Tuyue Chen , Congming Mu , Shengzhuo Tang","doi":"10.1016/j.econlet.2025.112169","DOIUrl":null,"url":null,"abstract":"<div><div>We consider the impacts of tax cuts and financing cost subsidies on liquidity management of environmentally and financially constrained firms. Tax cuts are relatively effective at achieving the goal of providing value to firms, promoting investment and paying more dividends. Financing subsidies lead firms to issue more equity and hold less cash on average. Moreover, financing subsidies are more effective in reducing asset sales but tax cuts are more effective in promoting positive investment. Tax cuts facilitate efficient improvement in social welfare.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"247 ","pages":"Article 112169"},"PeriodicalIF":2.1000,"publicationDate":"2025-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Economics Letters","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0165176525000060","RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"ECONOMICS","Score":null,"Total":0}
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Abstract
We consider the impacts of tax cuts and financing cost subsidies on liquidity management of environmentally and financially constrained firms. Tax cuts are relatively effective at achieving the goal of providing value to firms, promoting investment and paying more dividends. Financing subsidies lead firms to issue more equity and hold less cash on average. Moreover, financing subsidies are more effective in reducing asset sales but tax cuts are more effective in promoting positive investment. Tax cuts facilitate efficient improvement in social welfare.
期刊介绍：
Many economists today are concerned by the proliferation of journals and the concomitant labyrinth of research to be conquered in order to reach the specific information they require. To combat this tendency, Economics Letters has been conceived and designed outside the realm of the traditional economics journal. As a Letters Journal, it consists of concise communications (letters) that provide a means of rapid and efficient dissemination of new results, models and methods in all fields of economic research.
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