Tax policy and macro-finance in a competitive global economy where government is considered as firms' third financial stakeholder
Domestic tax policies must provide needed revenues for public infrastructure and social programs and must be structured to promote sustainable, growing, vibrant economies where individual rights and living standards are preserved or improved. We propose a macro-financial model be included with traditional financial macroeconomic theory postulating that, among other things, economic activity results from net international trade, inter-country capital flows, aggregate effects of all domestic private and public saving and investment and consumption decisions. We modify Modigliani and Miller's capital structure propositions (Modigliani and Miller, 1958, 1963) by adding government as the third major financial stakeholder where government possesses a stake in the firm because of the potential, just as stockholders, to receive future cash flows. We posit a 'conservation of value' where capital structure and the domestic tax structure have no effect on total firm value; however, affect relative stakeholder values, discount rates, capital investment and flow of capital into and out of a country.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 14 (2012)
Issue (Month): 1/2 ()
|Contact details of provider:|| Web page: http://www.inderscience.com/browse/index.php?journalID=168|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dan Galai & Zvi Wiener, 2003. "Government Support of Investment Projects in the Private Sector: A Microeconomic Approach," Financial Management, Financial Management Association, vol. 32(3), Fall.
- Frank Richter, 2004. "Valuation With Or Without Personal Income Taxes?," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 56(1), pages 20-45, January.
- Andrew Caplin & John Leahy, 2000.
"The Social Discount Rate,"
NBER Working Papers
7983, National Bureau of Economic Research, Inc.
- Andrew Caplin & John Leahy, 2001. "The social discount rate," Discussion Paper / Institute for Empirical Macroeconomics 137, Federal Reserve Bank of Minneapolis.
- Saman Majd & Stewart C. Myers, 1985. "Valuing the Government's Tax Claim on Risky Corporate Assets," NBER Working Papers 1553, National Bureau of Economic Research, Inc.
- Stewart C. Myers, 1984. "Capital Structure Puzzle," NBER Working Papers 1393, National Bureau of Economic Research, Inc.
- Robert A. Taggart & Jr., 1991. "Consistent valuation and Cost of Capital Expressions With Corporate and Personal Taxes," Financial Management, Financial Management Association, vol. 20(3), Fall.
- Stiglitz, Joseph E., 1973. "Taxation, corporate financial policy, and the cost of capital," Journal of Public Economics, Elsevier, vol. 2(1), pages 1-34, February.
- Merton H. Miller & Franco Modigliani, 1961. "Dividend Policy, Growth, and the Valuation of Shares," The Journal of Business, University of Chicago Press, vol. 34, pages 411.
- Myers, Stewart C., 1984. "Capital structure puzzle," Working papers 1548-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Fama, Eugene F., 1977. "Risk-adjusted discount rates and capital budgeting under uncertainty," Journal of Financial Economics, Elsevier, vol. 5(1), pages 3-24, August.
- Mario Massari & Francesco Roncaglio & Laura Zanetti, 2008. "On the Equivalence between the APV and the "wacc" Approach in a Growing Leveraged Firm," European Financial Management, European Financial Management Association, vol. 14(1), pages 152-162.
- Myers, Stewart C, 1984. " The Capital Structure Puzzle," Journal of Finance, American Finance Association, vol. 39(3), pages 575-92, July.
When requesting a correction, please mention this item's handle: RePEc:ids:gbusec:v:14:y:2012:i:1/2:p:30-66. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Graham Langley)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.