What question did this study set out to answer?

Investigate how timing of capital expenditures is affected by tax year-end considerations.

Taxes and the Timing of Corporate Capital Expenditures.

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Randomized trial shows that firms increase capital expenditures at the end of the tax year, suggesting tax impact on investment timing.

Investigate how timing of capital expenditures is affected by tax year-end considerations.
Analyzed capital investment data from 1979 to 1989
Examined differences in quarterly spending patterns
Tested the correlation between capital expenditures and debt issuance patterns
Firms significantly increase capital expenditures in Q4 compared to Q1, confirming the hypothesis.
High-tax firms issue long-term debt aligning with their increased Q4 capital expenditures.

Kinney et al. (1993) studied this question.

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