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http://hdl.handle.net/10419/43566
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| Title: | | Optimal investment and financial strategies under tax rate uncertainty  |
| 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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