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|Title:||Present bias and corporate tax policies||Authors:||Kang, Minwook
Ye, Sandy Lei
|Keywords:||Social sciences::Economic theory||Issue Date:||2019||Source:||Kang, M. & Ye, S. L. (2019). Present bias and corporate tax policies. Journal of Public Economic Theory, 21(2), 265-290. https://dx.doi.org/10.1111/jpet.12349||Journal:||Journal of Public Economic Theory||Abstract:||Two major forms of corporate tax policies are dividend and profits taxes. Based on conventional corporate theory, these tax policies distort the firm's investment decisions and decrease firm value. However, this paper shows that under hyperbolically discounted preferences, dividend taxation is capable of boosting firm investment in a value-enhancing way. The hyperbolically discounted present value can be interpreted as reflecting irrational myopic preferences or, as we demonstrate, reduced-form implications of corporate agency issues. Both cases result in an underinvestment problem for the firm, but the firm valuation criteria differ. The optimal taxation issue is discussed under a Cobb–Douglas production function setting.||URI:||https://hdl.handle.net/10356/150210||ISSN:||1097-3923||DOI:||10.1111/jpet.12349||Rights:||© 2019 Wiley Periodicals, Inc. All rights reserved.||Fulltext Permission:||none||Fulltext Availability:||No Fulltext|
|Appears in Collections:||SSS Journal Articles|
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