Tax, Stimuli of Investment and Firm Value

Yishay Maoz

MPRA Paper from University Library of Munich, Germany

Abstract: Pennings (2000) has shown that the government can speed-up investment by subsidizing the potential investing firm's entry cost while taxing the future proceeds from the investment, so as to render the net expected value of its subsidy program zero. This note argues that while speeding-up the investment timing, this subsidy-tax program also lowers the value of the firm and therefore will be rejected by it.

Keywords: Investment; Uncertainty; Option Value (search for similar items in EconPapers)
JEL-codes: D81 (search for similar items in EconPapers)
Date: 2007-08-01
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Related works:
Journal Article: TAX, STIMULI OF INVESTMENT AND FIRM VALUE (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:5596

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