Transmission channels of corporate taxation

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Type and Duration

FFF-Förderprojekt, September 2018 until November 2020 (finished)


Center for Economics

Main Research

Wealth Management

Field of Research

Tax Reform


Taxation is one of the most important tools governments use to influence the economy. To tackle the debt bias and foster innovation and growth, several countries (among them Liechtenstein) have introduced an Allowance for Corporate Equity (ACE) in their corporate tax system. Also the 2016 proposal of the European Commission for a Common Consolidated Corporate Tax Base (CCCTB) entails a variant of an ACE.
In this research project, we ask how taxes on corporate income affect corporate risk taking. Especially we focus on the underlying transmission channels, through which the companies respond to changes in the tax system. Understanding managerial risk taking is important, as managers need to take risks to improve competitive advantage and performance.

Project results:

Practical Application

The intended research project is of high relevance for both academia and practice. First, a theoretical model is set up which formalizes the impact of an ACE and explains the transmission channels of tax policy. Second, the model will enable practitioners in the field of taxation and finance to improve their decision making. Third, the research results can immediately be applied in a policy context. For instance, in the field of tax policy, whereas recommendations for optimal tax policy can be derived upon the scientific insights. This is of special importance with regard to the ACE, which is a central element of the Liechtenstein tax system.

Reference to Liechtenstein

As the ACE - which is a cornerstone of the Liechtenstein tax system and considered as a blueprint for the future European tax policy - affects financing decisions, research is needed to explore the transmission channels which are triggered by an ACE.

Project Manager

Project Collaborator


  • Forschungsförderungsfonds der Universität Liechtenstein


  • Marc Deloof & Tanja Kirn. (2019). Taxation and Entrepreneurial Risk Taking. Presented at the Addressing Tax Avoidance beyond BEPS, Università degli Studi di Ferrara.

  • Kirn, T. (2019). Taxes and Real Options. Presented at the VHB - Frühjahrstagung der Kommission Betriebswirtschaftliche Steuerlehre, Universität Münster.

  • Tanja Kirn. (2018). The cost of capital with full and incremental Allowance for Corporate incremental Allowance for Corporate Equity. Presented at the Corporate Finance Day, University of Antwerp.

  • Kirn, T. (2018). Taxes and Real Options. Presented at the VHB Frühjahrstagung der Kommission Betriebswirtschaftliche Steuerlehre, Jena 2018, Universität Jena.