52 research outputs found

    Neutrality Properties of Firm Taxation under Default Risk

    Get PDF
    This note discusses the neutrality conditions of a Firm Tax. In particular, it proves that the neutrality result found by Bond and Devereux (1995) holds under different default conditions.

    On the equivalence between labor and consumption taxation

    Get PDF
    This article studies the equivalence between labor and consumption taxes in a stochastic context, where the government can undertake an active portfolio management strategy by investing in both risk-free and risky assets. Using a two-period model we have shown that such taxes let consumers make the same decisions and can finance the same amount of government spending in each period.consumption and labor taxation, equivalence, risk.

    Preemption, Start-Up Decisions and the Firms' Capital Structure

    Get PDF
    In this article, we analyse the interactions between financial and start-up decisions in an oligopolistic framework, where firms compete to enter a new market. We show that preemption can substantially reduce the negative effects of credit rationing on start-up investment decisions.capital structure

    Investment Size and Firm’s Value Under Profit Sharing Regulation

    Get PDF
    In this article we analyse the effects of different regulatory schemes (price cap and profit sharing) on a firm’s investment of endogenous size. Using a real option approach in continuous time, we show that profit sharing does not affect a firm’s start-up decision relative to a pure price cap scheme. Unless the threshold after which profit sharing intervenes is very high, however, introducing a profit sharing element delays further investments: this decreases the present value of total investment. We also evaluate the reduction in the firm’s value due to profit sharing, linking this reduction to the option value of future investments.Regulation, Investment, Profit sharing, Real options, RPI-x

    Optimal Investment and Financial Strategies under Tax Rate Uncertainty

    Get PDF
    In this paper we apply a real-option model to study the effects of tax rate uncertainty on a firm's decisions. In doing so, we depart from the relevant literature, which focuses on fully equity-financed investment projects. By letting a representative firm borrow optimally, we show that debt finance not only encourages investment activities but can also substantially mitigate the effect of tax rate uncertainty on investment timing.Capital Levy, Corporate Taxation, Default Risk, Real Options

    Tax Neutrality : Illusion or Reality?

    Get PDF
    corecore