| dc.description.abstract | The Kenyan corporate income tax system provides investment incentives that vary across
asset types. Do corporations investment choices respond to these differences and if so by
how much? This research analyzes the effect of corporate income tax on investment
decisions of companies listed at the NSE. While policy makers have made effort to
impose more uniformity on corporate tax policies, no empirical study exists to quantify
the extent to which corporate income tax have altered the structure of investment
decisions. This is rather unfortunate because, as pointed out in Feldstein (1982) capital
consists of many types of equipment and structures. The objective of this study is to
establish the relationship between corporate taxes and investment decisions of the
companies listed at the NSE.
Descriptive Research was used in this study which involved the analysis of quantitative
data. The data was the financial statements of the companies listed at the NSE. It was a
census study this means that data from the whole population was analyzed. Secondary
data was collected from all the companies listed at the NSE from 2008 to 2012. Data
analysis was done using the SSPS where the regression analysis, ANOVA and correlation
coefficients were generated. T-test was done to prove the relevance of the study.
It was concluded that corporate tax affect investment decisions of the companies. All the
corporate tax variables affect the depended variables. The depreciation tax shield has a
very small negative value this implies that to a larger extend it reduce the corporate taxes
amount and increase the amounts available for investment. The interest tax shield, After
Tax cash flow and corporate tax all affect investment. Corporate tax is the highest in
reducing the amounts available for investment. The overall effect of these tax incentives
is therefore asset specific, depending on the characteristics of the physical asset and, to a
lesser extent, the industry in which the asset is placed. | en |
