A Contingent Claims Analysis of Partial Loss Offset Taxation and Risk-Taking
AbstractThis article models the government's tax claim on the firm in a tax regime where gains and losses are not treated symmetrically as a portfolio of options. Employing option pricing theory to value these options, the impact of changes in firm risk on the market values of the firm's debt and equity is examined. Given the objective of equity value maximization, the firm's risk-taking propensity is gauged under alternative financial and tax scenarios.
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Bibliographic InfoArticle provided by in its journal Public Finance = Finances publiques.
Volume (Year): 45 (1990)
Issue (Month): 2 ()
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- Rainer Niemann, 2004. "Asymmetric Taxation and Cross-Border Investment Decisions," CESifo Working Paper Series 1219, CESifo Group Munich.
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"Evaluating the minimum asset tax on corporations: an option pricing approach?,"
ULB Institutional Repository
2013/13378, ULB -- Universite Libre de Bruxelles.
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