Liu, Yuan-Chi - In: Journal of Banking & Finance 33 (2009) 6, pp. 1069-1078
The literature develops the theoretical rationale for the Value of Tax Shields (VTS) on the following misguided basis: it uses required rate of return on assets (or WACC) as the discount rate for capitalization, it uses expected rate of return on assets ( or as a proxy for WACC, and it is not...