Perspectives on David Guenther's and Richard Sansing's 'Fundamentals of Shareholder Tax Capitalization'

Deen Kemsley ()
Additional contact information
Deen Kemsley: Columbia Business School

Yale School of Management Working Papers from Yale School of Management

Abstract: A great deal of recent debate has revolved around the role for the RE/BV x NI interaction term in the equations used by Harris and Kemsley (1999) and follow-up studies, challenging the decision to include the term (see, e.g., Hanlon, Myers, and Shevlin, 2001, and Dhaliwal, Erickson, Myers, and Banyi, 2001). Guenther and Sansing (2002) address the issue directly, providing a set of sufficient conditions under which the interaction term is required. Their analysis, along with the extant empirical evidence, suggests it is critical to include the interaction term in empirical equations, else mis-specification results. Nevertheless, the analysis also indicates that the tax interpretation for retained earnings coefficients is not as clear as implied by Harris and Kemsley (1999). In this brief comment, I provide perspectives on the analysis in Guenther and Sansing (2002), and I flesh it out by showing the effects of adding another key assumption to their model.

Keywords: Dividend Tax Capitalization; Cost of Capital (search for similar items in EconPapers)
JEL-codes: H24 (search for similar items in EconPapers)
Date: 2002-04-28
References: Add references at CitEc
Citations:

Downloads: (external link)
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=301568 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ysm:somwrk:ysm266

Access Statistics for this paper

More papers in Yale School of Management Working Papers from Yale School of Management Contact information at EDIRC.
Bibliographic data for series maintained by ().