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The information content of investment tax credits

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  • Dimosthenis Hevas
  • Aphroditi Papadaki

Abstract

This study examines the association between stock prices and tax credits for new investment, which appear in the balance sheet as a tax-free reserve. A number of valuation models were developed for companies listed on the Athens Stock Exchange during the period 1990-4. The empirical findings reveal that retained earnings committed to new investment, i.e. investment tax credits for future investments, are valued differently from both the remaining equity and the remaining earnings. Moreover, the empirical evidence suggests that the investment tax credits in Greece are not always viewed in a positive fashion by the stock market.

Suggested Citation

  • Dimosthenis Hevas & Aphroditi Papadaki, 2001. "The information content of investment tax credits," European Accounting Review, Taylor & Francis Journals, vol. 10(1), pages 173-186.
    • Handle: RePEc:taf:euract:v:10:y:2001:i:1:p:173-186
    DOI: 10.1080/09638180122598
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