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    • Author-Supplied Keywords:
      default risk
      Effective tax rate
      fixed debt
      optimized leverage
      stationary leverage
      structural model
    • Abstract:
      The taxation treatment of corporations has been one of the central issues regarding firm valuation. The statutory income tax rates differ significantly by states. The system of tax codes is further complicated by a variety of exemptions, deferrals and potential loopholes. Many types of institutional investors enjoy different degrees of beneficial tax treatments. All these factors make the "true tax rates" an elusive factor in valuing a firm or project regardless of how theoretically accurate the valuation formula might be. Therefore, a meaningful task is to reasonably estimate the effective corporate income tax rate. But this task becomes more challenging due to the interaction of tax shields and capital structure policies. The results are interesting in making economic sense and also in pointing out the direction of improvements in structural modeling of default. [ABSTRACT FROM AUTHOR]
    • Abstract:
      Copyright of International Journal of Business, Accounting, & Finance is the property of International Academy of Business & Public Administration Disciplines (IABPAD), LLC and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)
    • Author Affiliations:
      1University of North Carolina at Charlotte
      2Michigan Technological University
      3University of Michigan at Dearborn
    • ISSN:
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