Corporate taxation and investment in South Africa
type: CreativeWork
description: This thesis investigates some aspects of corporate taxation and firm-level investment in South Africa. The thesis uses specially constructed and unique datasets to draw insights on the link between corporate tax changes and firm-level investment and as well as the efficiency of capital allocation in South Africa. The thesis comprises a short introductory chapter, three empirical chapters, and a summary chapter. The first empirical chapter (chapter 2) evaluates the responsiveness of firm-level investment to corporate tax changes over a period of notable corporate tax reforms in South Africa. The study estimates a reduced form neoclassical investment model using a particularly constructed dataset of firms listed on the Johannesburg stock exchange over the period 1999-2012. Generalised methods of moments (GMM) techniques are used to control for various econometric biases. The findings suggest that although the corporate tax reforms reduced the marginal cost of investment, these reductions did not result in a statistically significant increase in firm-level investment. The null effects found in this study are robust to various estimation specifications. Although at variance with the established literature from developed countries, the findings are similar to emerging evidence in other developing country contexts and suggest that other factors may be more important determinants of investment than corporate tax policy. Chapter 3 explores the possibility that the unresponsiveness of firm-level investment to corporate tax policy may be a result of the presence of financial constraints. According to the financial constraints hypothesis, neoclassical fundamentals may fail to explain investment in the presence of financial constraints. The paper investigates the role of financial constraints in investment using dynamic GMM and endogenous switching regressions methods. The paper finds that financial constraints are an important factor in investment determination. Firms that are…
abstract: This thesis investigates some aspects of corporate taxation and firm-level investment in South Africa. The thesis uses specially constructed and unique datasets to draw insights on the link between corporate tax changes and firm-level investment and as well as the efficiency of capital allocation in South Africa. The thesis comprises a short introductory chapter, three empirical chapters, and a summary chapter. The first empirical chapter (chapter 2) evaluates the responsiveness of firm-level investment to corporate tax changes over a period of notable corporate tax reforms in South Africa. The study estimates a reduced form neoclassical investment model using a particularly constructed dataset of firms listed on the Johannesburg stock exchange over the period 1999-2012. Generalised methods of moments (GMM) techniques are used to control for various econometric biases. The findings suggest that although the corporate tax reforms reduced the marginal cost of investment, these reductions did not result in a statistically significant increase in firm-level investment. The null effects found in this study are robust to various estimation specifications. Although at variance with the established literature from developed countries, the findings are similar to emerging evidence in other developing country contexts and suggest that other factors may be more important determinants of investment than corporate tax policy. Chapter 3 explores the possibility that the unresponsiveness of firm-level investment to corporate tax policy may be a result of the presence of financial constraints. According to the financial constraints hypothesis, neoclassical fundamentals may fail to explain investment in the presence of financial constraints. The paper investigates the role of financial constraints in investment using dynamic GMM and endogenous switching regressions methods. The paper finds that financial constraints are an important factor in investment determination. Firms that are…
author: Maboshe, Mashekwa
keywords: economics
date published: 2021
date modified: 2026-07-22T22:22:43Z
provider: University of Cape Town
publisher: Networked Digital Library of Theses and Dissertations
type: WebPage
source organization: School of Economics

PropertyValue
property ID: Handle
value: http://hdl.handle.net/11427/35538