Taxation, Uncertainty, and the Cost of Equity for a Multinational Firm Taxation, Uncertainty, and the Cost of Equity for a Multinational …rm
نویسندگان
چکیده
From a CAPM-type model the cost of equity is derived for a ...rm operating under various foreign tax systems. The ...rm’s shares are traded in a market which is una¤ected by these systems. The cost of capital depends on the foreign tax system, even for fully equity ...nanced projects. This is neglected in much of the literature. For a corporate income tax the main factor which reduces the cost of equity is the depreciation deductions. Compared with a neutral cash ‡ow tax, this reduces the cost of equity because it acts as a loan from the ...rm to the government.
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