Taxation in Norwegian Salmon Aquaculture

Abstract

The newly introduced Salmon Tax in Norway has been a hot topic since its announcement in 2022. Shifting the spotlight from political discussions to economic consequences of this taxation – this thesis takes on the topic of how this announcement has affected the leverage among the affected firms within the aquaculture industry. We therefore outlined our research question as follows: "Does the announcement of the salmon tax affect capital structure decisions of Norwegian salmon farming companies?"

Based on The Trade-Off Theory, we predicted our results to show an increase in leverage after the post-announcement period. According to this theory, firms balance the costs of financial risk against the tax advantages of debt. With a sample of 297 firms that represents all firms listed on the Oslo Børs, and a sample period from 2018 to 2023, we used a Difference-in-Difference approach to capture the effect on leverage from the pre period to the post period. In general, the evidence fails to provide support for the Trade-Off Theory. And on average, leverage does not change significantly following the announcement of the tax. It is only when we condition the analysis further on profitable firms and leave out fixed effects, that we find some evidence supporting the idea that profitable firms increase book leverage in response to the tax announcement. However, this effect depends on regression specifications and is not robust through all regressions.