The interest expense paid on bonds lowers corporate net income while dividends paid on shares have no effect on net income.

Name: The interest expense paid on bonds lowers corporate net income while dividends paid on shares have no effect on net income.
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Interest expense paid on bonds is a deductible expense for tax purposes and therefore reduces taxable income, which results in lower net income. Dividends paid on shares, on the other hand, do not reduce taxable income and have no effect on net income.

The Interest Expense Paid on Bonds Lowers Corporate Net Income