Inflation, tax shields and borrowing: Why is the balance sheet of the corporate sector becoming vulnerable?
South African Journal of Business Management
| Field | Value | |
| Title | Inflation, tax shields and borrowing: Why is the balance sheet of the corporate sector becoming vulnerable? | |
| Creator | Biger, N. | |
| Description | The en-masse bankruptcies of many corporations in high inflation countries in recent years is attributed partially to the pre-recession high-risk financial planning. This paper elaborates on the type of considerations which govern the financial decisions of local firms in an inflationary environment and shows that the real cost of borrowing, even index-linked or hard currency funds may be very low and even negative. This might happen due to common tax laws. This phenomenon lead many business firms to prefer debt over equity financing. The analysis indicates the kind of risk assessment which South African firms might have to conduct when they formulate their credit and financial policies in a high-inflation environment. | |
| Publisher | AOSIS | |
| Date | 1987-09-30 | |
| Identifier | 10.4102/sajbm.v18i3.1011 | |
| Source | South African Journal of Business Management; Vol 18, No 3 (1987); 145-151 2078-5976 2078-5585 | |
| Language | eng | |
| Relation |
The following web links (URLs) may trigger a file download or direct you to an alternative webpage to gain access to a publication file format of the published article:
https://sajbm.org/index.php/sajbm/article/view/1011/953
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