To shift or not to shift? Intertemporal income shifting as a response to the Risk Capital Allowance Introduction in Belgium KU Leuven
This study examines how firms shift profits from one period to another in response to the introduction of an allowance for corporate equity (ACE). We focus on the introduction of the risk capital allowance (RCA) in Belgium by the law of June 22nd, 2005. We predict and find that firms with relatively low (but positive) earnings in 2006 have incentives to defer profits in 2005 and that this effect is stronger for firms with higher equity ratios. ...