Graham (1996)found that changes in long-term debt are positively related to the company's:

Question

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Changes in long-term debt are positively related to the company's effective marginal tax rate. This is because the effective marginal tax rate is the rate at which the company's taxes increase as its income increases. As a company's long-term debt increases, its income also increases, which leads to an increase in its effective marginal tax rate.

Graham (1996)found That Changes in Long-Term Debt Are Positively Related