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TAX, STIMULI OF INVESTMENT AND FIRM VALUE
Author(s) -
Maoz Yishay D.
Publication year - 2011
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/j.1467-999x.2010.04099.x
Subject(s) - subsidy , investment (military) , economics , value (mathematics) , government (linguistics) , present value , monetary economics , microeconomics , public economics , finance , market economy , linguistics , philosophy , machine learning , politics , political science , computer science , law
Pennings (2000, European Economic Review , 44, pp. 383–91) 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 investment, this subsidy‐tax program also lowers the value of the firm and therefore will be rejected by it.