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Kruschwitz, Lutz
Löffler, Andreas
Year of Publication: 
Series/Report no.: 
Arqus-Diskussionsbeiträge zur quantitativen Steuerlehre 191
This paper attempts to analytically determine the impact a tax shield (marginal tax rate) has on the value of a levered firm assuming that gains and losses are taxed differently. Previous research has done this by employing empirical methods and simulation studies. We are able to present closed-form solutions for two popular financing policies. Our solutions reveal that the marginal tax rate is a function with an order greater than one.
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Working Paper

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