An important variable absent in agency cost analyses is the extent of cooperation among the manager and the investors. Two types of cooperation are studied: 1.) generalized cooperation, a concept close to social capital; and 2.) discriminating cooperation, a concept close to cooperation with...

When calculating Tax Savings, TS we are confronted with a strange mix of accounting accrual and market value when involving TS in the calculation of the Weighted Average Cost of Capital, WACC or the Cost of Equity, Ke. Firms earn the right to TS once they accrue the interest expense and they...