Munich Personal RePEc Archive

Effect of corporate income tax and firms’ size on investment: evidence by Karachi stock exchange

Raza, Syed Ali and Ali, Syed Adeel and Abassi, Zia (2011): Effect of corporate income tax and firms’ size on investment: evidence by Karachi stock exchange. Forthcoming in: EUROPEAN JOURNAL OF ECONOMICS, FINANCE AND ADMINISTRATIVE SCIENCES

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Abstract

This study investigates to explore the effect of Corporate Income Tax and Firms’ Size on Capital Investment made in tangible assets by the Manufacturing firms belongs to nine non-financial sectors listed in Karachi Stock Exchange. To examine the study Panel financial Data on annual basis has been gathered for the period of six years from 65 sample manufacturing companies. To determine the effect of two predictors as Corporate income tax and Firms’ Size on Fixed investment the results are generated by using multiple regression analysis as a statistical technique with the help of multiple Statistical tools for high accuracy of outcomes. The results conclude that there is a negative relationship exists between corporate income tax and investment while firm size and investment reveals a positive relationship with each other. Therefore, it has been cleared in the light of above results that excess tax obligations in a firm specific sector will discourage corporate investor for investment in it. On the other hand enhancement in firm size as total sales revenue will increase the level of investment in a KSE listed firm and vice versa for developed hypothesis.

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