This study examines the relative values of controlling and non-controlling interests in a sample of publicly-traded parent-subsidiary pairs. The relative values are found in the empirical relationship between each interest's market value and their share of subsidiary net assets and net income....

In this paper, we examine how taxation affects the optimal hedging behavior of an investor exposed to price risk under partial loss offset provision. In this regime, only part of the loss is refunded through the tax. As such, it implies a non linearity in the taxation schedule. More...

We explore the impact of market structure on the ex-day price anomaly. Measuring the price-drop ratio (hereafter PDR) as the ratio of the price change on the ex-day to the dividend amount, we find that the average Nasdaq PDR is significantly less than one and significantly less than the NYSE...

This paper investigates a corporate tax-based and shareholder tax-based explanation for a firm's decision to finance a stock repurchase by utilizing debt, commonly referred to as a leveraged share repurchase. I find that during tax regimes in which corporate tax rates are more favorable for the...

This paper exploits a natural experiment from the late 1800s in which many U.S. firms had inadvertently issued both taxable and tax-exempt bonds. Investors paid income tax on taxable bonds, but firms covered income tax on investors' behalf on tax-exempt bonds. Using a unique data-set of these...

Incorporating a progressive or convex income tax into valuation problems raises the question of the appropriate tax rate to use in common valuation formulas. We apply arbitrage theory in a riskless, as well as risky, (multi-period) economy to answer this question. It turns out that the...

I investigate the link between dividend taxes and stock prices in a global setting. Based on findings from an open-economy after-tax capital asset pricing model, I predict that when the U.S. cut its dividend tax rate in 2003, stock prices will increase for high-dividend yield foreign firms that...

In this study, we use cross-sectional regressions to estimate the value of the debt-tax shield. Recognizing that debt is correlated with the value of operations along nontax dimensions, we estimate reverse regressions in which we regress future profitability on firm value and debt rather than...

The Jobs and Growth Tax Relief Reconciliation Act of 2003 reduced shareholder level taxes on equity income. If shareholder level taxation is a component of cost of equity capital, then the cost of equity capital should decrease after the Tax Act. We find that the cost of equity capital decreases...

The quest for financial integration in Europe has created pressures to adapt the taxation of income from capital to the new reality of free capital movments and access to global markets for investments. Taxation of income from capital is among the most important factors affecting investment...