The slicing approach to valuing tax shields

Journal of Banking and Finance

Volumn 33, Issue 6, 2009, Pages 1069-1078

  Liu, Yuan Chi ^a  

^a Department of Finance and Banking ^*  (Taiwan)

Author keywords

Leverage return; Required rate of return; Tax shields; The VTS capacity

Indexed keywords

EID: 62749124796     PISSN: 03784266     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.jbankfin.2008.12.002     Document Type: Article

References (28)

1. Arditti F.D., and Levy H. The weighted average cost of capital as a cutoff rate: A critical examination of the classical textbook weighted average. Financial Management 23 (1977) 24-34
2. Atkinsons, L., 1982. Economics: The Science of Choice. Irwin, p. 440, figure 18.1.
3. Cooper I.A., and Nyborg K.G. The value of tax shields IS equal to the present value of tax shields. Journal of Financial Economics 81 (2006) 215-225
4. Fan H., and Sundaresan S.M. Debt valuation renegotiation and optimal dividend policy. Review of Financial Studies (2000) 1057-1099
5. Fernandez P. The value of tax shield is NOT equal to the present value of tax shields. Journal of Financial Economics 73 (2004) 145-165
6. Fernandez, P., 2008. The equity premium in 100 textbooks. Working paper IESE Business School available at: .
7. Hall R., and Lieberman M. Economics: Principles and Applications (1988), Southern-Western p. 176
8. Hamada R. Portfolio analysis, market equilibrium and corporation finance. Journal of Finance 24 (1969) 13-31
9. Harris R.S., and Pringle J.J. Risk-adjusted discount rates extensions form the average-risk case. Journal of Financial Research 8 (1985) 237-244
10. Levy H. Principles of Corporate Finance (1998), South-Western p. 613
11. Lipsey R., and Courant P. Economics. 11th ed. (1996), Harper Collins
12. Liu Y.C. Cost-of-equity-irrelevance regarding corporate tax. Corporate Finance Review 12 (2007) 21-25
13. Liu, Y.C., 2008a. The generalized MM cost of capital is irrelevant to capital structure theory. Working paper, Hsuan-Chuang University, Taiwan, available at .
14. Liu, Y.C., 2008b. A generalized mathematical formula for the optimal capital structure. Working paper, Hsuan-Chuang University, Taiwan, available at .
15. MM,CAPM = 0, the false NPV for equity capital. Working paper, Hsuan-Chuang University, Taiwan, available at .
16. Miles L., and Ezzell J. Reformulating tax shield valuation: A note. Journal of Finance 40 (1985) 1485-1492
17. Modigliani F., and Miller M. The cost of capital corporation finance and the theory of investment. American Economic Review 48 (1958) 261-297
18. Modigliani F., and Miller M. Corporate income taxes and the cost of capital: A correction. American Economic Review 53 (1963) 433-443
19. Myers S. Interactions of corporate financing and investment decisions - Implications from capital budgeting. Journal of Finance 64 (1974) 1-25
20. Myers, S., 1999. The search for optimal capital structure. In: Chew Jr., D.H. (Ed.), The New Corporate Finance, p. 205.
21. Parkin M. Microeconomics. seventh ed. (2005), Pearson Addison-Wesley p. 196
22. Pastor L., and Stambaugh R.F. Cost of equity capital and model mispricing. Journal of Finance 54 (1999) 67-121
23. Penman S.H. Financial Statement Analysis and Security Valuation. second ed. (2003), McGraw-Hill p. 116
24. Penman S.H. Financial Statement Analysis and Security Valuation. third ed. (2007), McGraw-Hill p. 476
25. Ruback R.S. Capital cash flows: A simple approach to valuing risky cash flows. Financial Management 31 (2002) 85-103
26. Samuelson P.A. Economics. ninth ed. (1973), McGraw-Hill p. 472
27. Solmon L.C. Economics. second ed. (1976), Addison-West p. 502
28. Wonnacott, and Wonnacott. Economics (1979) 424