Valor de los Ahorros en Impuestos por Deuda en Colombia: Un Estudio Empírico (Value of Debt Tax Shields in Colombia: An Empirical Study)

Abstract

The English version of this paper can be found at http://ssrn.com/abstract=1919305

This paper estimates the value of tax shields, using the discounted cash flow method for 23 major non financial firms listed in the Bolsa de Valores de Colombia (Colombian Stock Exchange) between 2001 and 2010. Our results show that on average this value represents between 7.6% and 9.3% of firm value, depending on which discount rate is used for tax shields. It also finds that firms’ average leverage is low relative to other countries. Using Data Panel regressions, no conclusive evidence was found on whether or not debt created value for the sampled firms within that timespan.

Note: Downloadable document is in Spanish.

Keywords: tax shields, discount rates firm value, leverage

JEL Classification: G12, G32, M21, M41