Corporation income taxes and the cost of capital: a revision
Fuente:
Redalyc
Salvato in:
| Autore principale: | |
|---|---|
| Natura: | Artículo científico |
| Lingua: | en |
| Pubblicazione: |
Universidad Nacional de Colombia
2012
|
| Soggetti: | |
| Accesso online: | |
| Tags: |
Aggiungi Tag
Nessun Tag, puoi essere il primo ad aggiungerne!!
|
| _version_ | 1876436572790849536 |
|---|---|
| author | James W. Kolari |
| author_facet | James W. Kolari |
| contents | Corporation income taxes and the cost of capital: a revision James W. Kolari Ignacio Vélez-Pareja Administración y Contabilidad Firm valuation Share valuation Capital structure Value of tax shields The value of debt tax shields in foundational corporate valuation models by NobelLaureates Modigliani and Miller (MM) continues to be a controversial issue that is central to ourunderstanding of corporate finance. Rather than discounting debt interest payments using a risklessinterest rate or unlevered equity rate, the present paper proposes the use of the levered cost ofequity. Assuming no bankruptcy risk and no personal taxes, our revised tax model yields an invertedU-shaped firm value function with an interior optimal capital structure. Analyses are extended toMiller’s personal tax extension of MM’s tax model. Also, implications to corporate capital structuredecisions and previous literature are discussed. 2012 artículo científico 0121-5051 https://www.redalyc.org/articulo.oa?id=81827442006 en http://www.redalyc.org/revista.oa?id=818 INNOVAR. Revista de Ciencias Administrativas y Sociales application/pdf Universidad Nacional de Colombia INNOVAR. Revista de Ciencias Administrativas y Sociales (Colombia) Num.46 Vol.22 |
| format | Artículo científico |
| id | redalyc_81827442006 |
| institution | Redalyc |
| language | en |
| publishDate | 2012 |
| publisher | Universidad Nacional de Colombia |
| spellingShingle | Corporation income taxes and the cost of capital: a revision James W. Kolari Administración y Contabilidad Firm valuation Share valuation Capital structure Value of tax shields Corporation income taxes and the cost of capital: a revision James W. Kolari Ignacio Vélez-Pareja Administración y Contabilidad Firm valuation Share valuation Capital structure Value of tax shields The value of debt tax shields in foundational corporate valuation models by NobelLaureates Modigliani and Miller (MM) continues to be a controversial issue that is central to ourunderstanding of corporate finance. Rather than discounting debt interest payments using a risklessinterest rate or unlevered equity rate, the present paper proposes the use of the levered cost ofequity. Assuming no bankruptcy risk and no personal taxes, our revised tax model yields an invertedU-shaped firm value function with an interior optimal capital structure. Analyses are extended toMiller’s personal tax extension of MM’s tax model. Also, implications to corporate capital structuredecisions and previous literature are discussed. 2012 artículo científico 0121-5051 https://www.redalyc.org/articulo.oa?id=81827442006 en http://www.redalyc.org/revista.oa?id=818 INNOVAR. Revista de Ciencias Administrativas y Sociales application/pdf Universidad Nacional de Colombia INNOVAR. Revista de Ciencias Administrativas y Sociales (Colombia) Num.46 Vol.22 |
| title | Corporation income taxes and the cost of capital: a revision |
| topic | Administración y Contabilidad Firm valuation Share valuation Capital structure Value of tax shields |
| url | https://www.redalyc.org/articulo.oa?id=81827442006 |