Have U.S. Corporations Grown Financially Weak?

The feelingis widespread that the financial strength of U.S. corporations has eroded over the past twenty years. This trend is often blamed on some combination of the tax system, inflation and overly optimistic assessments of business risk.This paper examines recent corporate financing developments from along-run perspective. It is concluded that these developments appear less dangerous when viewed in the context of the twentieth century as a whole than when viewed in the context of the post-World War II years. A second major conclusion is that powerful corrective mechanisms are at work to keep corporate financial positions from becoming too risky. These forces have been particularly noticeable over the past ten years. Third, the effects on business financing of the tax system, inflation and business risk are difficult to trace in the aggregate data, and these effects may be less straightforward than has commonly been thought. Finally, it is argued that the degree of economic instability and the relative level of federal government borrowing will be key determinants of future corporate financing patterns.

Consistent Valuation and Cost of Capital Expressions with Corporate and Personal TAxes

This paper examines three valuation methods, each of which should lead to the same value for a given asset. These are the Adjusted Present Value, Adjusted Discount Rate and Flows to Equity methods. To achieve identical valuations, however, the different methods must be implemented with cost of capital expressions that embody a consistent set of assumptions about (1) the tax regime and (2) the time pattern and riskiness of debt tax shields. Valuation and cost of capital expressions that have been proposed in the literature are grouped and contrasted according to these assumptions. It is also shown that the familiar weighted average cost of capital can be consistent with any such set of assumptions, as long as the correct expression is used to estimate the relationship between the levered and unlevered cost of equity.

Implications of Corporate Capital Structure Theory for Banking Institutions

This paper applies some recent advances in corporate capital structure theory to the determination of optimal capital in banking. The effects of corporate and personal taxes, government regulation, the technology of producing deposit services and the costs of bankruptcy and agency problems are all discussed in the context of the U.S. commercial banking system. The analysis suggests explanations for why commercial banks tend to have relatively less capital than nonfinancial firms, why commercial bank leverage has tended to increase over time and why large banks tend to have relatively less capital than small banks.

Taxes and Ownership Structure: Corporations, Partnerships and Royalty Trusts

This paper investigates the effect of taxes on the equilibrium ownership structure of productive assets. Ownership structure includes the traditional choice between debt and equity financing, but also the larger choice between corporate and partnership forms. A key feature of these alternative forms is that corporations are subject to taxation at both the corporate and investor levels, whereas partnerships are not. At the same time, depreciation and interest tax shields are taken at the corporate tax rate for corporate assets and at investors' tax rates for partnership assets. We find that assets endowed with excess non-interest tax deductions are best held in partnership form by high tax bracket investors. Assets whose allowed deductions are low enough to generate a net tax liability in corporate formare best held as partnerships by low tax bracket investors. All other assets are held in the corporate sector and are financed in a manner consistent with Miller's(1977) capital structure equilibrium.We argue that our analysis illuminates the tax aspects of such transactionsas mergers and sales or spin-offs of corporate assets to partnerships and royalty trusts. We also show that our results afford a simple characterization of the lease or buy decision.

Kv7 and Kv11 channels in myometrial regulation.

Ion channels play a key role in defining myometrial contractility. Modulation of ion channel populations is proposed to underpin gestational changes in uterine contractility associated with the transition from uterine quiescence to active labour. Of the myriad ion channels present in the uterus, this article will focus upon potassium channels encoded by the KCNQ genes and ether-à-go-go-related (ERG) genes. Voltage-gated potassium channels encoded by KCNQ and ERG (termed Kv7 and Kv11, respectively) are accepted as major determinants of neuronal excitability and the duration of the cardiac action potential. However, there is now growing appreciation that these ion channels have a major functional impact in vascular and non-vascular smooth muscle. Moreover, Kv7 channels may be potential therapeutic targets for the treatment of preterm labour

Greenhouse gas emissions from soils under organic management

This report was presented at the UK Organic Research 2002 Conference. Land emissions of N2O, CO2 and NH3 have been subject to little study under organic systems, yet form important aspects of sustainability of such systems. We describe innovative methods developed at SAC to assess trace gas emission using both automatic closed chamber systems (intensive, short term monitoring) and manually-operated closed chamber systems (occasional, long term monitoring). Long-term data were collected from organic ley-arable rotation trials in North-east of Scotland. Short term data were collected to show the effect of timing and depth of ploughing-out of the ley phase on gas emissions. Ploughing gave a shortterm stimulation of CO2 and, more markedly, of N2O emission. Emissions of N2O from organic grass-clover leys were considerably lower than from conventional grass. However, some N2O emissions from organic arable are higher than from conventional systems, particularly in the first year after ploughing out ley. Ammonia emissions after spreading manure on grass were significant in the summer, though only short-lived