Download or read book Taxes and the Cost of Equity Capital written by Uzi Yaari and published by . This book was released on 1979 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Tax and the Cost of Equity Capital written by Dan S. Dhaliwal and published by . This book was released on 2014 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the association between taxes and the cost of equity capital in an international setting that allows for exogenous, cross-sectional variation in corporate and investor tax rates. Using a sample of firms from 33 countries over a 21-year period, we find that the cost of equity capital increases in leverage. This effect decreases in the corporate tax rate as well as the personal tax penalty on interest income relative to equity income, though the significance of this latter result is sensitive to model specification. Further, we find that the cost of equity capital increases in tax penalized dividend income and that cross-border equity investments affect the relation between taxes and the cost of equity capital. In sum, we offer further and confirming evidence, in an international setting, that taxes impact the cost of equity capital.

Download or read book Taxes Leverage and the Cost of Equity Capital written by Dan S. Dhaliwal and published by . This book was released on 2006 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the associations between leverage, corporate and investor level taxes, and the firm's implied cost of equity capital. Expanding on Modigliani and Miller [1958,1963], the cost of equity capital can be expressed as a function of leverage and corporate and investor level taxes. This expression predicts that the cost of equity is increasing in leverage, but that corporate taxes mitigate this leverage related risk premium, while the personal tax disadvantage of debt increases this premium. We empirically test these predictions using implied cost of equity estimates and proxies for the firm's corporate tax rate and the personal tax disadvantage of debt. Our results suggest that the equity risk premium associated with leverage is decreasing in the corporate tax benefit from debt. We find some evidence that the equity risk premium associated with leverage is increasing in the personal tax penalty associated with debt.

Download or read book Dividend Taxes and Implied Cost of Equity Capital written by Dan S. Dhaliwal and published by . This book was released on 2006 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We estimate firm level implied cost of equity capital based on recent advances in accounting and finance research and examine the effect of dividend taxes on the cost of equity capital. We investigate whether dividend taxes affect firms' cost of capital by testing the relation between the implied cost of equity capital and a measure of the tax-penalized portion of dividend yield, which we define as the product of dividend yield and the dividend tax penalty. The results generally support the dividend tax capitalization hypothesis. We find a positive relation between the implied cost of equity capital and the tax-penalized portion of dividend yield that is decreasing in aggregate institutional ownership, our proxy for tax advantaged investors. The evidence in this study adds to the understanding of the effect of investor-level taxes on equity value.

Download or read book Taxing Corporate Income in the 21st Century written by Alan J. Auerbach and published by Cambridge University Press. This book was released on 2007-04-16 with total page 401 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book was first published in 2007. Most countries levy taxes on corporations, but the impact - and therefore the wisdom - of such taxes is highly controversial among economists. Does the burden of these taxes fall on wealthy shareowners, or is it passed along to those who work for, or buy the products of, corporations? Can a country with high corporate taxes remain competitive in the global economy? This book features research by leading economists and accountants that sheds light on these and related questions, including how taxes affect corporate dividend policy, stock market value, avoidance, and evasion. The studies promise to inform both future tax policy and regulatory policy, especially in light of the Sarbanes-Oxley Act and other actions by the Securities and Exchange Commission that are having profound effects on the market for tax planning and auditing in the wake of the well-publicized accounting scandals in Enron and WorldCom.

Download or read book Tax Normalization and the Cost of Equity Capital for Regulated Utilities written by DataMetrics Limited and published by . This book was released on 1982* with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Taxes Volatility and the Cost of Equity Capital written by Derek W. Dalton and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We hypothesize that the 2003 decrease in individual tax rates on dividends and capital gains should have been followed by a decline in the cost of capital and increased volatility, especially for dividend paying firms. We observe a significantly positive increase in the volatility of daily returns which is larger for dividend than non-dividend-paying firms, and is positively associated with dividend yield. We find that the increase in volatility dampened the cost of capital reduction brought about by the tax reduction. We also analyze changes in ERCs as a proxy for changes in firm cost of capital. The heightened investor response to unexpected earnings information is larger for dividend-paying firms overall, but is not positively associated with dividend yield. These results suggest that as dividend yields increase, the initial effect of the tax rate changes on cost of capital is offset by increased return volatility from those same rate changes.

Download or read book Cost of Capital written by Shannon P. Pratt and published by John Wiley & Sons. This book was released on 2008-02-25 with total page 448 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this long-awaited Third Edition of Cost of Capital: Applications and Examples, renowned valuation experts and authors Shannon Pratt and Roger Grabowski address the most controversial issues and problems in estimating the cost of capital. This authoritative book makes a timely and significant contribution to the business valuation body of knowledge and is an essential part of the expert's library.

Download or read book The Cost of Equity Capital with Personal Income Taxes and Flotation Costs written by Myron J. Gordon and published by . This book was released on 1978 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Tax Reform and the Cost of Capital written by Dale Weldeau Jorgenson and published by Oxford University Press. This book was released on 1991 with total page 210 pages. Available in PDF, EPUB and Kindle. Book excerpt: Introduction -- Taxation of income from capital -- The U.S. tax system -- Effective tax rates -- Summary and conclusion.

Download or read book Did the 2003 Tax Act Reduce the Cost of Equity Capital written by Dan S. Dhaliwal and published by . This book was released on 2006 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Jobs and Growth Tax Relief Reconciliation Act of 2003 (the 2003 Tax Act) drastically reduced shareholder level taxes on equity income. If shareholder level taxation is an important component of cost of equity capital, then cost of equity should decrease after the 2003 Tax Act. Using the approach of Dhaliwal, Krull, Li, and Moser (2005) that relies on estimates of implied cost of equity capital, we find that cost of equity decreased by about 1.02% after the 2003 Tax Act. We also show that for firms largely held by institutional investors to whom the tax rate reduction does not apply, the decline in the cost of equity capital is smaller. These results suggest that the 2003 Tax Act may have achieved its intended goal of lowering the cost of equity capital. They also add further evidence to a more fundamental research question, that is, taxes impact valuation.

Download or read book Impact of Estate and Gift Taxation on Capital Formation written by United States. Congress. House. Committee on Small Business. Subcommittee on Tax, Access to Equity Capital, and Business Opportunities and published by . This book was released on 1981 with total page 292 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Taxation and the Cost of Capital written by Hans-Werner Sinn and published by . This book was released on 1990 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper is a critical survey of the recent literature on the tax effects on corporate finance and investment decisions. It corrects a common misinterpretation of the "new" view, emphasizes the cushion effect of financial optimization, dismisses the view that optimizing firms behave as if they maximized their cost of finance, studies the role of immature firms, questions the alleged support of the old view by the occurrence of share repurchases, comments on a potential US budget compromise, and suggests the idea of a Political Miller Equilibrium.

Download or read book Tax Normalization and the Cost of Equity Capital for Regulated Utilities written by G. C. (Gordon Campbell) Watkins and published by Calgary : Department of Economics, University of Calgary. This book was released on 1984 with total page 94 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Taxation of Income from Capital written by Arnold C. Harberger and published by . This book was released on 1969 with total page 372 pages. Available in PDF, EPUB and Kindle. Book excerpt: Compilation of papers on problems of income taxation and the effects thereof on capital gains in the USA - covers economic implications, legal aspects of the tax system, fiscal policy, long term pattern of financing of enterprises, the effects of income taxation on labour force supply, etc., and includes statistical tables and information on personal income and investment. References.

Download or read book The Capital Structure Decision written by Harold Bierman Jr. and published by Springer Science & Business Media. This book was released on 2012-12-06 with total page 230 pages. Available in PDF, EPUB and Kindle. Book excerpt: In 1958 an academic paper on corporate finance written by two professors (Merton Miller and Frances Modigliani, who were later awarded the Nobel prize for their research efforts) was published in The American Economic Review. One prime conclusion of their paper was that the exact form of a firm's capital structure did not affect the firm's value. Later papers by the same two authors and by many others modified the assumptions and changed this conclusion. We now think that capital structure decisions do affect a firm's value and corporate managers should understand better the financing alternatives that are available. One of the most important financial decisions is the decision to buy or lease assets. The leasing industry is large and getting larger. Unfortunately, it is very easy for a firm to evaluate incorrectly lease alternatives (see Chapter 12). The capital structure decision is one of the three most important financial decisions that management make (the distribution of earnings and the capital budgeting decisions are the other two contenders). Managers should increase their understanding of capital structure alternatives and remember that choosing the best capital structure is an art and not an exact simple calculation. But applying the art can be improved with understanding.

Download or read book COST OF CAPITAL A FINANCIAL TOOL TO CREATE AND MAXIMIZE SHAREHOLDER VALUE written by EMMANUEL ATTAH KUMAH and published by Lulu.com. This book was released on 2013-07-27 with total page 140 pages. Available in PDF, EPUB and Kindle. Book excerpt: The cost of capital is important in the financial management of every business. A measure of the cost of capital is required when evaluating various aspects of strategic business plans, e.g., selecting a financial leverage position, calculating the profitability of alternative investment opportunities, measuring economic value-added and comparing various merger and acquisition plans. The task of determining the appropriate cost of capital to use requires a careful analysis of the effect of alternative financing choices which are open to every business. This report considers the cost of capital of Royal Roots Company. Ways are examined to determine the cost of capital by Royal Roots Company. This book sequentially identifies: principles of cost of capital, the capital structure, the cost of debt, cost of equity, cost of preference shares and overall cost of capital (weighted average cost of capital).The cost of equity capital and debt determines the overall cost of capital of any company (public or private)