Taxation and the Cost of Capital: The "Old" View, the "New" View and Another View
This paper is a critical survey of the recent literature on the tax effects on corporate finance and investment decisions. It corrects a common misinterpretation of the "new" view, emphasizes the cushion effect of financial optimization, dismisses the view that optimizing firms behave as if they maximized their cost of finance, studies the role of immature firms, questions the alleged support of the old view by the occurrence of share repurchases, comments on a potential US budget compromise, and suggests the idea of a Political Miller Equilibrium.
|Date of creation:||Oct 1990|
|Date of revision:|
|Publication status:||published as Taxation and the Cost of Capital: The "Old" View, the "New" View, and Another View , Hans-Werner Sinn. in Tax Policy and the Economy, Volume 5 , Bradford. 1991|
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