Taxation and Investment Decisions: A Real Options Approach

Elettra Agliardi ()

Australian Economic Papers, 2001, vol. 40, issue 1, pages 44-55

Abstract: The purpose of the paper is to analyse the impact of the tax system on the firm's incentives to invest and disinvest in an uncertain environment. This paper follows the real options approach, which allows us to investigate the value to a firm of waiting to invest and/or disinvest, when payoffs are stochastic and investments partially reversible. The implications for the magnitude and directions of the effects of tax policy are studied; also the case of tax policy uncertainty is examined. Copyright 2001 by Blackwell Publishers Ltd/University of Adelaide and Flinders University of South Australia

Date: 2001
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