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Tax, Stimuli Of Investment And Firm Value

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  • Yishay D. Maoz

Abstract

Pennings (2000) has shown that the government can speed-up investment by subsidizing the potential investing firm's entry cost while taxing the future proceeds from the investment, so as to render the net expected value of its subsidy program zero. This note argues that while speeding-up the investment timing, this subsidy-tax program also lowers the value of the firm and therefore will be rejected by it.
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Suggested Citation

  • Yishay D. Maoz, 2011. "Tax, Stimuli Of Investment And Firm Value," Metroeconomica, Wiley Blackwell, vol. 62(1), pages 171-174, February.
    • Handle: RePEc:bla:metroe:v:62:y:2011:i:1:p:171-174
    DOI: j.1467-999X.2010.04099.x
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    References listed on IDEAS

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    1. Robert McDonald & Daniel Siegel, 1986. "The Value of Waiting to Invest," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 101(4), pages 707-727.
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    Cited by:

    1. Cesare Dosi & Michele Moretto & Roberto Tamborini, 2019. "Balanced-budget fiscal stimuli of investment and welfare value," DEM Working Papers 2019/12, Department of Economics and Management.
    2. Kai Chang & Ning Lu & Ze Sheng Li & Yi Ran Wang, 2021. "The combined impacts of fiscal and credit policies on green firm's investment opportunity: Evidences from Chinese firm‐level analysis," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(7), pages 1822-1835, October.
    3. Luca Corato, 2016. "Investment stimuli under government present-biased time preferences," Journal of Economics, Springer, vol. 119(2), pages 101-111, October.
    4. Dimitrios Zormpas, 2021. "Jointly Held Investment Options and Vertical Relationships," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 58(4), pages 513-530, June.
    5. Diogo Barbosa & Vitor M. Carvalho & Paulo J. Pereira, 2013. "The interaction between firms and Government in the context of investment decisions: a real options approach," FEP Working Papers 507, Universidade do Porto, Faculdade de Economia do Porto.

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    More about this item

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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