DHALIWAL, DAN; HEITZMAN, SHANE; LI, OLIVER ZHEN - In: Journal of Accounting Research 44 (2006) 4, pp. 691-723
We examine the associations among leverage, corporate and investor level taxes, and the firm's implied cost of equity capital. Expanding on Modigliani and Miller [1958, 1963], the cost of equity capital can be expressed as a function of leverage and corporate and investor level taxes. Based on...