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|Title:||Optimal Investment and Financial Strategies under Tax Rate Uncertainty |
Panteghini, Paolo M.
|Issue Date:||2010 |
|Series/Report no.:||CESifo working paper Public Finance 3017|
|Abstract:||In this paper we apply a real-option model to study the effects of tax rate uncertainty on a firm's decisions. In doing so, we depart from the relevant literature, which focuses on fully equity-financed investment project. By letting a representative firm borrow optimally, we show that debt finance not only encourages investment activities but can also substantially mitigate the effect of tax rate uncertainty on investment timing.|
|Document Type:||Working Paper|
|Appears in Collections:||CESifo Working Papers, CESifo Group Munich|
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