Debt policy, corporate taxes, and discount rates
نویسندگان
چکیده
منابع مشابه
Welcome Debt Policy , Corporate Taxes , and Discount Rates ∗ †
Debt Policy, Corporate Taxes, and Discount Rates This paper studies the valuation of assets with debt tax shields when debt policy is a general time-dependent function of the asset’s unlevered cash flows, value, and history. In a continuous-time setting, it shows that the value of a project’s debt tax shield satisfies a partial differential equation, which simplifies to an easily solved ordinar...
متن کاملTax-Adjusted Discount Rates with Investor Taxes and Risky Debt
This paper derives a tax-adjusted discount rate formula with a constant proportion leverage policy, investor taxes, and risky debt. The result depends on an assumption about the treatment of taxlosses in default. We identify the assumption that justiftes the textbook approach of discounting interest tax shields at the cost of debt. We contrast this with an alternative assumption that leads to t...
متن کاملDO TAXES AFFECT CORPORATE DEBT POLICY? Evidence from U.S. Corporate Tax Return Data
This paper uses U.S. Statistics of Income (SOI) Corporate Income Tax Returns balance sheet data on all corporations, to estimate the effects of changes in corporate tax rates on the debt policies of firms of different sizes. Small firms face very different tax rates than larger firms, and relative tax rates have also changed frequently over time, providing substantial information to identify ta...
متن کاملSimulating Corporate Marginal Income Tax Rates and Implications for Corporate Debt Policy
We study several important tax-related issues related to the measurement and use of corporate marginal tax rates. First, we develop an AR(1) method to simulate corporate marginal income tax rates and demonstrate that the AR(1) model improves upon the extant random walk and bin approaches. The new AR(1) approach captures firm-specific features, including mean-reversion in taxable income. Second,...
متن کاملDebt, Taxes, and Liquidity
We analyze a model of optimal capital structure and liquidity choice based on a dynamic tradeoff theory for financially constrained firms. In addition to the classical tradeoff between the expected tax advantages of debt and bankruptcy costs, we introduce a cost of external financing for the firm, which generates a precautionary demand for liquidity and an optimal liquidity management policy fo...
متن کاملذخیره در منابع من
با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید
ژورنال
عنوان ژورنال: Journal of Economic Theory
سال: 2008
ISSN: 0022-0531
DOI: 10.1016/j.jet.2007.09.009