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http://hdl.handle.net/10419/43566
  
Title:Optimal investment and financial strategies under tax rate uncertainty PDF Logo
Authors:Fedele, Alessandro
Panteghini, Paolo M.
Vergalli, Sergio
Issue Date:2010
Series/Report no.:Nota di lavoro // Fondazione Eni Enrico Mattei: Institutions and markets 2010,68
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 projects. 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.
Subjects:Capital Levy
Corporate Taxation
Default Risk
Real Options
JEL:H2
Document Type:Working Paper
Appears in Collections:FEEM Working Papers, Fondazione Eni Enrico Mattei

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