The Tepper-Black arguments for tax-arbitrage opportunities from overfunding pension plans are critically examined and modifications proposed. Tax status, a function of current marginal tax rates and expected future taxable income, is predicted to determine funding policy. Tests of this modified tax benefits view suggest that 1) tax status declines are associated with pension contribution reduct...

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...

Companies incur significant costs from the financial distress. Predicting financial distress will have an important role in preventing bankruptcy. The aim of the present study is to predict the financial distress costs using the Leland and Toft models, during 1996 and 1998. This study examines data relating to 49 companies listed in the Tehran stock exchange collected over ten years from 2005 t...

The first study for this dissertation develops a tax-adjusted cost-of-carry model for Australian stock index futures and estimates the value of the debt tax shield, cash dividends and imputation tax credits flowing from the basket stocks in the index. As discussed in the previous chapter, the study relaxes the assumption made in previous research that interest and dividends receive the same tax...

In running a business, every company definitely needs funds to help develop its business. The obtained can come from the itself or outside parties who invest in company. Therefore, managing existing company, it is necessary have wisdom deciding whether needed within then be used accordance with operational by itself. purpose of this study was determine and analyze effect Tax Expense, Non Debt S...

This paper describes a simple way to integrate the debt tax shield into an accounting-based valuation model. The market value of equity is determined by forecasting residual operating income, which is calculated by charging operating income for the operating assets at a required return that accounts for the tax benefit that comes from borrowing to raise cash for the operations. The model assume...