Marginal versus average beta of equity under corporate taxation

Research, Preprint English OPEN
Lund, Diderik;
(2009)
  • Publisher: Oslo: University of Oslo, Department of Economics
  • Subject: Kapitalkosten | G31 | F23 | loss offset | H25 | Cost of capital; WACC; loss offset; tax shields; options | Cost of capital | Multinationales Unternehmen | Unternehmensbesteuerung | options | Betriebliche Investitionspolitik | WACC | Theorie | tax shields
    • jel: jel:F23 | jel:G31 | jel:H25
      ddc: ddc:330

Even for fully equity-financed firms there may be substantial effects of taxation on the after-tax cost of capital. Among the few studies of these effects, even fewer identify all effects correctly. When marginal investment is taxed together with inframarginal, marginal... View more
  • References (1)

    1 + r 1 ¡ ta ¡ 1 ¡ ta ¡ 3See Garnaut and Clunies Ross (1975, 1979), Fane (1987) and Bond and Devereux (1995). Such deductions are sometimes known as Allowance for Corporate Equity.

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