An Econometric Model to Measure the Impact of Taxation on Corporate Investment Efficiency

Abstract

This study aims to examine the econometric models used to measure the impact of taxation policies on corporate investment efficiency. Through a systematic literature review, this research analyzes various quantitative approaches commonly applied in empirical studies, including panel regression models, the Generalized Method of Moments, and techniques for addressing endogeneity. The findings of the literature review indicate that taxation significantly affects corporate investment behavior, both directly and indirectly. These effects manifest through tax shields, tax avoidance strategies, and the implementation of fiscal incentives. Furthermore, the effectiveness of tax policy in improving investment efficiency varies depending on firm characteristics, institutional quality, and the structure of tax systems in different countries. By synthesizing theoretical frameworks and empirical evidence, this study provides both conceptual and practical insights into how econometric tools are utilized to assess the implications of fiscal policy on firm-level investment decisions. The results serve as a useful reference for policymakers, researchers, and practitioners aiming to design or evaluate pro-investment tax reforms across diverse economic contexts.