the value of tax shields is equal to the present value of tax shields abstract fernandez 2004b the value of tax shields is not equal to the present value of tax shields journal of financial economics 73 145 165 argues that the present value effect of the tax saving on debt cannot be calculated as simply the present value of the tax shields associated with interest this contradicts standard results in the literature it implies that even though the capital market is complete value additivity is violated as a consequence adjusted present value formulae of a standard sort cannot be used also fernandez s argument implies that the value of the tax saving differs from conventional estimates by a considerable amount we reconcile fernandez s results with standard valuation formulae for the tax saving from debt we show that as one would expect the value of the debt tax saving is the present value of the tax savings from interest the apparent violation of value additivity in the fernandez paper comes from mixing the miles and ezzell and miller and modigliani leverage policies

the impact on economic performance of a transformation in workplace relations this study examines how a transformation in patterns of conflict and cooperation affected economic performance in 25 work areas of a large unionized manufacturing facility in the period 1984 87 unlike most studies of industrial relations and economic performance this study clearly distinguishes conflict from cooperation but evaluates the two together rather than focusing on only one an analysis of data collected from union and employer records and interviews strongly suggests that work areas with traditional labor management relations rooted in adversarial assumptions had higher costs more scrap lower productivity and a lower return to direct labor hours worked than work areas with transformational relations characterized by increased cooperation and improved dispute resolution

the value of tax shields is not equal to the present value of tax shields abstract the value of tax shields is the difference between the present values of two different cash flows each with their own risk the present value of taxes for the unlevered company and the present value of taxes for the levered company for constant growth companies the value of tax shields in a world with no leverage cost is the present value of the debt times the tax rate times the unlevered cost of equity discounted at the unlevered cost of equity this result arises as the difference of two present values and does not mean that the appropriate discount for tax shields is the unlevered cost of equity

learning about a new technology pineapple in ghana this paper investigates the role of social learning in the diffusion of a new agri cultural technology in ghana we use unique data on farmers communication patterns to define each individual s information neighborhood conditional on many potentially confounding variables we find evidence that farmers adjust their inputs to align with those of their information neighbors who were surpris ingly successful in previous periods the relationship of these input adjustments to experience further indicates the presence of social learning in addition applying the same method to input choices for another crop of known technol ogy correctly indicates an absence of social learning effects jel d83 013 033 q16

international environmental agreements for local and global pollution abstract increasing concerns about climate change have given rise to the formation of international environmental agreements ieas as a possible solution to limit global pollution effects in this paper we study the stability of ieas in a repeated game framework where we restrict to strategies which are simple and invariant to renegotiation our main contribution is that we characterize necessary and sufficient conditions for stability of an iea when pollution has both a global and local effect local pollution spillovers are represented by a network structure we find that stable ieas exist if the network structure is balanced too large asymmetries in the degree of local spillovers may however lead to non existence of stable structures we also discuss the implications of our results for welfare the generality of our approach allows for several applications in particular the provision of public goods

valuation of highly leveraged firms the financial policy highly leveraged firms hlfs commonly follow implies uncertain leverage explicit allowance for this characteristic leads to two complementary pricing models a recursive formula for the value of hlf follows from applying the adjusted present value apv approach to uncertain tax shields this formula is used to evaluate the robustness of the simple apv rule and other valuation approaches used in practice the hlf equity is also modeled as a call option with uncertain exercise price which provides a natural way of dealing with uncertain leverage and complements the apv approach both models require inputs that are usually observable the models developed in this article apply to the valuation of firms undergoing financial restructuring as well as to leveraged buyouts and project financing in all these situations firms deploy all or a significant portion of their free cash flow to debt reduction and their leverage ratio is uncertain

tax adjusted discount rates this paper develops models for discount rates that are adjusted for the interest tax shields of an infra marginal firm in a general tax equilibrium where there is cross sectional variation in corporate tax rates under the assumption that the firm optimally maintains a predetermined debt ratio a tax adjusted riskless discount rate model is given for valuing certainty equivalents and a tax and risk adjusted discount rate model is given for valuing expected cash flows for the latter case the asset equity debt and tax shield betas are derived and a weighted average cost of capital interpretation is given the tax adjusted capm apt security market lines for expected returns in stock and bond markets both have the same slope but different intercepts a formula is also provided for the present value of the interest tax shield when the firm optimally maintains a predetermined debt level the analysis here also differs from the existing literature in the following respects it allows for cross sectional variation in corporate tax rates and personal tax rates it shows that the market values of risky and riskless interest tax shields differ only to the extent that tax laws provide for nonlinear taxation of gains and losses it also shows that interest tax shields should be discounted at a tax adjusted discount rate that reflects the fact that they accrue to equity investors rather than debt investors continuous time simplifications of the formulas in this paper and the previous literature are also given

centralized bargaining and reorganized work are they compatible the paper examines the implications for wage bargaining of an important aspect of the ongoing reorganization of work the move from occupational specialization toward multi tasking the analysis shows how on account of such reorganization centralized bargaining becomes increasingly ine cient and detrimental to rms pro t opportunities since it prevents rms from o ering their employees adequate incentives to perform the appropriate mix of tasks the paper also shows how centralized bargaining inhibits rms from using wages to induce workers to learn how to use their experience from one set of tasks to enhance their performance at other tasks in this way the paper may also help explain the increasing resistance to centralized bargaining in various advanced market economies 2001 elsevier science b v all rights reserved

tax evasion on a social network abstract we relate tax evasion behavior to a substantial literature on social comparison in judgements taxpayers engage in tax evasion as a means to boost their expected consumption relative to others in their social network the unique nash equilibrium of the model relates optimal evasion to a bonacich measure of network centrality more central taxpayers evade more given that tax authorities are now investing heavily in big data tools that aim to construct social networks we investigate the value of acquiring network information we do this using networks that allow for celebrity taxpayers whose consumption is seen widely and who are systematically of higher wealth we show that there are pronounced returns to the initial acquisition of network information especially in the presence of celebrity taxpayers

adaptive learning in weighted network games abstract this paper studies adaptive learning in the class of weighted network games this class of games includes applications like research and development within interlinked firms crime within social networks the economics of pollution and defense expenditures within allied nations we show that for every weighted network game the set of pure nash equilibria is non empty and generically finite pairs of players are shown to have jointly profitable deviations from interior nash equilibria if all interaction weights are either non negative or non positive then nash equilibria are pareto inefficient we show that quite general learning processes converge to a nash equilibrium of a weighted network game if every player updates with some regularity

public goods in networks this paper considers incentives to provide goods that are non excludable along social or geographic links we find first that networks can lead to specialization in public good provision in every social network there is an equilibrium where some individuals contribute and others free ride in many networks this extreme is the only outcome second specialization can benefit society as a whole this outcome arises when contributors are linked collectively to many agents finally a new link increases access to public goods but reduces individual incentives to contribute hence overall welfare can be higher when there are holes in a network

industrial relations performance economic performance and qwl programs an interplant analysis this study analyzes the relationship among plant level measures of industrial relations performance economic performance and quality of working life programs the analysis employs pooled time series and cross section data from 18 plants within a division of general motors for the years 1970 79 the empirical results show strong associations between industrial relations and economic performance measures and limited support for the hypothesis that quality of working life efforts improve both kinds of performance

optimal pricing in networks with externalities we study the optimal pricing strategies of a monopolist selling a divisible good service to consumers who are embedded in a social network a key feature of our model is that consumers experience a positive local network effect in particular each consumer s usage level depends directly on the usage of her neighbors in the social network structure thus the monopolist s optimal pricing strategy may involve offering discounts to certain agents who have a central position in the underlying network our results can be summarized as follows first we consider a setting where the monopolist can offer individualized prices and derive a characterization of the optimal price for each consumer as a function of her network position in particular we show that it is optimal for the monopolist to charge each agent a price that consists of three components i a nominal term that is independent of the network structure ii a discount term proportional to the influence that this agent exerts over the rest of the social network quantified by the agent s bonacich centrality and iii a markup term proportional to the influence that the network exerts on the agent in the second part of the paper we discuss the optimal strategy of a monopolist who can only choose a single uniform price for the good and derive an algorithm polynomial in the number of agents to compute such a price third we assume that the monopolist can offer the good in two prices full and discounted and we study the problem of determining which set of consumers should be given the discount we show that the problem is np hard however we provide an explicit characterization of the set of agents who should be offered the discounted price next we describe an approximation algorithm for finding the optimal set of agents we show that if the profit is nonnegative under any feasible price allocation the algorithm guarantees at least 88 of the optimal profit finally we highlight the value of network information by comparing the profits of a monopolist who does not take into account the network effects when choosing her pricing policy to those of a monopolist who uses this information optimally

splitting up value a critical review of residual income theories this paper deals with the notion of residual income which may be defined as the surplus profit that residues after a capital charge opportunity cost has been covered while the origins of the notion trace back to the 19th century in depth theoretical investigations and widespread real life applications are relatively recent and concern an interdisciplinary field connecting management accounting corporate finance and financial mathematics peasnell 1981 1982 peccati 1987 1989 1991 stewart 1991 ohlson 1995 arnold and davies 2000 young and o byrne 2001 martin petty and rich 2003 this paper presents both a historical outline of its birth and development and an overview of the main recent contributions regarding capital budgeting decisions production and sales decisions implementation of optimal portfolios forecasts of asset prices and calculation of intrinsic values a most recent theory the systemic value added approach also named lost capital paradigm provides a dierent denition of residual income consistent with arbitrage theory en folded in keynes s 1936 notion of user cost and forerun by pressacco and stucchi 1997 the theory has been formally introduced in magni 2000a b c 2001a b 2003 where its properties are thoroughly investigated as well as its relations with the standard theory two different lost capital metrics have been considered for value based management purposes by drukarczyk and schueler 2000 and young and o byrne 2001 this work illustrates the main properties of the two theories and their relations and provides a minimal guide to construction of performance metrics in the two approaches

the appraisal of industrial investments a new method and a case study abstract a general method of investment projects evaluation proposed by the second author is outlined it consists in decomposing in period quotas myers adjusted present value the analysis of these quotas provides satisfactory insight into the profitability of the project per se and its profitability through an adequate funding policy a case from real life concerning a large scale industrial investment is briefly discussed and some advantages of the method are highlighted

the repatriation incentive of the foreign dividend exemption system abstractdue to the high taxation of domestic corporate income japanese multinational enterprises have avoided to repatriate foreign profits to japan for quite some time as a consequence the japanese government introduced a new taxation system in 2009 the so called dividend exemption system which was aimed at reducing the effective tax burden of foreign dividends of japanese multinational companies in order to increase tax revenue and stimulate economic growth applying a theoretical framework which allows comparing the repatriation incentive of the old and new japanese tax systems we find that in the long run the tax regime change fails to incentivize foreign subsidiaries to repatriate foreign profits especially subsidiaries with high leverage located in countries with low corporate taxes and low dividend taxes might reinvest rather than distribute their earnings in the dividend exemption method

residual income and value creation an investigation into the lost capital paradigm this paper presents a new way of measuring residual income originally introduced by magni 2000a 2000b 2003 contrary to the standard residual income the capital charge is equal to the capital lost by investors the lost capital may be viewed as a the foregone capital b the capital implicitly infused into the business c the outstanding capital of a shadow project d the claimholders credit relations of the lost capital with book values and market values are studied as well as relations of the lost capital residual income with the classical standard paradigm many appealing properties are derived among which a property of earnings aggregation different concepts and results provided by different authors in such different fields as economic theory management accounting and corporate finance are considered o hanlon and peasnell s 2002 unrecovered capital and excess value created ohlson s 2005 abnormal earnings growth o byrne s 1997 eva improvement miller and modigliani s 1961 investment opportunities approach to valuation keynes s 1936 user cost drukarczyk and schueler s 2000 net economic income fernandez s 2002 created shareholder value anthony s 1975 profit they are all conveniently reinterpreted within the theoretical domain of the lost capital paradigm and conjoined in a unified view the results found make this new theoretical approach a good candidate for firm valuation incentive compensation capital budgeting decision making

peer effects in endogenous networks abstract this paper presents a model of strategic network formation with local complementarities in effort levels and positive local externalities results are obtained for a general class of payoff functions which subsumes the linear quadratic specification frequently used in theoretical and applied work we assume homogeneous agents and characterize equilibria for two sided and one sided link formation pairwise nash equilibrium networks are nested split graphs which are a strict subset of core periphery networks we highlight the relevance of the convexity of the value function for obtaining these structures more central agents are shown to exert more effort and obtain higher gross payoffs in equilibrium however net of linking cost central agents may obtain strictly lower net payoffs the curvature of the value function is also important for efficiency considerations these findings are relevant for many social and economic phenomena such as educational attainment criminal activity labor market participation and r d expenditures of firms

learning by doing and learning from others human capital and technical change in agriculture household level panel data from a nationally representative sample of rural indian households describing the adoption and profitability of high yielding seed varieties hyvs associated with the green revolution are used to test the implications of a model incorporating learning by doing and learning spillovers the estimates indicate that i imperfect knowledge about the management of the new seeds was a significant barrier to adoption ii this barrier diminished as farmer experience with the new technologies increased iii own experience and neighbors experience with hyvs significantly increased hyv profitability and iv farmers do not fully incorporate the village returns to learning in making adoption decisions

the law of the few the law of the few refers to the following empirical phenomenon in social groups a very small subset of individuals invests in collecting information while the rest of the group invests in forming connections with this select few in many instances there are no observable dierences in characteristics between those who invest in information and those who invest in forming connections this paper shows that the law of few naturally emerges in environments with identical rational agents we develop a strategic game in which players have the opportunity to invest in collecting information as well as in investing in bilateral connections with others we find that every strict equilibrium of this game exhibits the law of the few we also show that this pattern of social dierentiations is ecient in some cases

worker participation and productivity in labor managed and participatory capitalist firms a meta analysis using meta analytic techniques the author synthesizes the results of 43 published studies to investigate the effects on productivity of various forms of worker participation worker participation in decision making mandated codetermination profit sharing worker ownership employee stock ownership or individual worker ownership of the firm s assets and collective ownership of assets workers collective ownership of reserves over which they have no individual claim he finds that codetermination laws are negatively associated with productivity but profit sharing worker ownership and worker participation in decision making are all positively associated with productivity all the observed correlations are stronger among labor managed firms firms owned and controlled by workers than among participatory capitalist firms firms adopting one or more participation schemes involving employees such as esops or quality circles

network security and contagion abstract we develop a theoretical model of security investments in a network of interconnected agents network connections introduce the possibility of cascading failures due to an exogenous or endogenous attack depending on the profile of security investments by the agents we provide a tractable decomposition of individual payoffs into an own effect and an externality which also enables us to characterize individual investment incentives recursively by considering the network with one agent removed at a time using this decomposition we provide characterization of equilibrium and socially optimal investment levels as a function of the structure of the network highlighting the role of a new set of network centrality measures in shaping the levels of equilibrium and optimal investments when the attack location is endogenized by assuming that the attacker chooses a probability distribution over the location of the attack in order to maximize damage similar forces still operate but now because greater investment by an agent shifts the attack to other parts of the network the equilibrium may involve too much investment relative to the social optimum

estimating the value of an in kind transfer the case of food stamps the value of one in kind transfer food stamps is estimated by evaluating the experience of an actual conversion from stamps to cash in puerto rico in 1982 the evidence indicates that the cashout of the stamps had no detectable influence on food expenditures the explanation partly lies in the distribution of expenditures for the stamps were inframarginal for most recipients however some evidence indicates that trafficking in stamps was widespread as well including indirect evidence from estimation of the piecewise linear constraint model copyright 1989 by the econometric society

the uniqueness of nash equilibrium in the private provision of public goods abstract this note provides an alternative elementary proof of bergstrom blume and varian s well known result on the uniqueness of nash equilibrium in the private provision of a public good when all goods are normal

debt policy corporate taxes and discount rates abstract this paper applies the standard risk neutral valuation framework to tax shields generated by dynamic debt policies we derive a partial differential equation pde for the value of the debt tax shield for a class of dynamic debt policies that depend on the asset s free cash flows value and past performance we obtain closed form solutions for the pde we also derive the tax adjusted cost of capital for free cash flows and analyze the conditions under which the weighted average cost of capital is an appropriate discount rate finally we derive closed form solutions for equity betas which differ from the formulas that have traditionally been used to lever and unlever equity betas

incorporating financing related determinants of value in the discounted cash flow model abstract the paper discusses how some of the main types of interaction between financing and value can be incorporated in the discounted cash flow model of valuation including effects arising from taxes transactions costs disclosure information asymmetry and agency problems it explains whether a given effect should appear in a project s cash flows in its cost of capital or as an upfront adjustment to value most of the effects imply that the principle of value additivity does not hold

employee voice human resource practices and quit rates evidence from the telecommunications industry the authors draw on strategic human resource and industrial relations theories to identify the sets of employee voice mechanisms and human resource practices that are likely to predict firm level quit rates then empirically evaluate the predictive power of these variables using data from a 1998 establishmentlevel survey in the telecommunications industry with respect to alternative voice mechanisms they find that union representation predicts lower quit rates even after they control for compensation and a wide range of other human resource practices that may be affected by collective bargaining also predicting lower quit rates is employee participation in offline problem solving groups and in self directed teams no apparent association is found between quit rates and the availability of nonunion dispute resolution procedures regarding human resource practices higher relative wages and internal promotion policies predict lower quit rates and contingent staffing electronic monitoring and variable pay predict higher rates

taking stock collective bargaining at the turn of the century examining data from two national surveys of matched pairs of union and management lead negotiators the authors evaluate the current state of practice in labor relations and test several propositions related to the transformation of american industrial relations they find that 30 40 of the parties reported that they had introduced negotiated workplace level innovations or engaged in strategic level interactions both important aspects of transformation also nearly half of the parties reported experience with use of interest based bargaining practices at the same time relatively few parties reported relationships that were improving and views on the extent of change differed between labor and management thus there is an identifiable path supporting the transformation process but only a minority of bargaining relationships are moving down that path

the slicing approach to valuing tax shields abstract the literature develops the theoretical rationale for the value of tax shields vts on the following misguided basis it uses required rate of return on assets or wacc as the discount rate for capitalization it uses expected rate of return on assets roa or roi as a proxy for wacc and it is not aware of 1 the influence of the difference between expected rate of return on equity and required rate of return on equity rroe on vts 2 the fact that rroe is equity normal profit which is not measurable 3 the economic content of the weight attached to the vts capacity and 4 the co definition of tax shield and leverage return this paper takes tax shields and leverage return as a system and provides a knife interest rate roi cost price to slice the vts capacity into earned vts and unearned vts earned vts is vts unearned vts is the value of leverage return because leverage return is tax payable

unions and cooperative behavior the effect of discounting using union contract and industry wage survey data this article examines the effect of discounting on cooperative bargaining behavior by unions and firms game theory predicts that higher discount rates raise the temptation to defect from cooperation measures of cooperative behavior included the presence of merit pay incentive pay wage employment guarantees or labor management study committees discount rates were proxied by the relevant industry s failure rate failure rates generally had negative effects on cooperation industry wage survey results showed larger effects for union than non union establishments providing support for the union bargaining framework

unionization and profitability evidence from the capital market this paper examines the effect of unionization on the profitability of firms abnormal monthly common stock returns for a sample of 253 nyse listed firms are estimated for the month in which the union petitions for an election and for the month in which the national labor relations board certifies the election outcome the results suggest that unionization on average is associated with a reduction in equity value when unions win an election the average loss associated with the unionization drive is 3 8 percent of equity value when unions lose an election there is an average net reduction of 1 3 percent in the equity value of the firm

the decentralization of collective bargaining a literature review and comparative analysis the author reviews evidence that the bargaining structure is becoming more decentralized in sweden australia the former west germany italy the united kingdom and the united states although in

uniqueness of nash equilibrium in private provision of public goods an improved proof our 1986 paper private provision of public goods presents a theorem on the uniqueness of nash equilibrium in the private provision of public goods richard hirth of the university of pennsylvania and clive fraser of warwick have independently suggested that although our theorem is correct our proof is incorrect each writer proposes an alternative method of proof for the theorem with characteristic charity to our own deficiencies we prefer to view our earlier proof as unduly opaque rather than wrong whichever view one takes a more transparent proof is called for the proof presented here follows the same outline as our 1986 proof but explains a step of the argument that was far from obvious in the original proof this proof uses the notation of the 1986 paper and refers to facts that are proved there

social norms in networks abstract although the linear in means model is the workhorse model in empirical work on peer effects its theoretical properties are understudied in this study we develop a social norm model that provides a microfoundation of the linear in means model and investigate its properties we show that individual outcomes may increase decrease or vary non monotonically with the taste for conformity equilibria are usually inefficient and to restore the first best the planner needs to subsidize tax agents whose neighbors make efforts above below the social norms thus giving more subsidies to more central agents is not necessarily efficient we also discuss the policy implications of our model in terms of education and crime

altruism in networks we provide the first analysis of altruism in networks agents are embedded in a fixed network and care about the well being of their network neighbors depending on incomes they may provide financial support to their poorer friends we study the nash equilibria of the resulting game of transfers we show that equilibria maximize a concave potential function we establish existence uniqueness of equilibrium consumption and generic uniqueness of equilibrium transfers we characterize the geometry of the network of transfers and highlight the key role played by transfer intermediaries we then study comparative statics a positive income shock to an individual benefits all for small changes in incomes agents in a component of the network of transfers act as if they were organized in an income pooling community a decrease in income inequality or expansion of the altruism network may increase consumption inequality

corporate debt management and the value of the firm three alternative characterizations of corporate debt management policy which have had wide currency in the literature are examined they are shown to give rise to substantial differences in their predictions of total firm value this study concludes that of the three the one that assumes that management periodically rebalances the firm s debt levels in response to evolving new information on expected future operating cash flows is the most logically consistent on that basis a reinterpretation of the available empirical evidence on the tax effect of debt is indicated

the stability of the cournot oligopoly model a reassessment abstract the stability properties of the cournot oligopoly model are examined for the continuous adjustment process sufficient conditions for instability are established which are shown to be of significance when the number of firms n is small local and global stability are shown under appropriate conditions which for global stability include the restriction n 5 the proof of global stability corrects a well known proof by f hahn rev econ stud 29 1962 329 331 results for the discrete time adjustment process are reported and the restrictiveness of the model s assumptions are discussed

the effects of grievance activity on productivity this study develops and tests a production function that includes a plant s grievance filing rate as a determinant of productivity application of that function to data on nine unionized paper mill

altruists egoists and hooligans in a local interaction model the authors study a population of agents each of whom can be an altruist or an egoist altruism is a strictly dominated strategy agents choose their actions by imitating others who earn high payoffs interactions between agents are local so that each agent affects and is affected by only his neighbors altruists can survive in such a world if they are grouped together so that the benefits of altruism are enjoyed primarily by other altruists who then earn relatively high payoffs and are imitated altruists continue to survive in the presence of mutations that continually introduce egoists into the population copyright 1998 by american economic association

cost of capital spot rate or forward rate abstractin this study we intend to reveal some problems with the classic valuation method the weighted average cost of capital wacc method we first address a fundamental question about wacc that is should wacc be interpreted as a spot rate a forward rate or any kind of average of either of them we show that the nature of wacc is the expected forward rate we next demonstrate that without understanding this nature we may misinterpret the famous mm formula and mm proposition ii as well as develop incorrect valuation framework our findings provide insightful implications to academia and practitioners for the proper interpretation and implementation of the wacc method

the cost of segregation in social networks abstract this paper investigates the welfare effect of income redistribution in the private provision of public goods on networks we first show that the welfare effect of income redistribution is determined by bonacich centrality then we develop an index based on the network structure of interactions which roughly speaking measures the welfare effect of income redistribution confined to a component of contributors the proposed index vanishes when applied to large components of contributors that display special segregated interactions which suggests an asymptotic neutrality of redistributive policies

on the private provision of public goods on networks abstract this paper analyzes the private provision of public goods where consumers interact within a fixed network structure and may benefit only from their direct neighbors provisions we present a proof of the existence and uniqueness of a nash equilibrium for general networks and best reply functions in addition we investigate the neutrality result of warr 38 and bergstrom blume and varian 6 whereby consumers are able to undo the impact of income redistribution as well as public provision financed by lump sum taxes to this effect we show that the neutrality result has a limited scope of application beyond a special network architecture in the neighborhood of the set of contributors

reformulating tax shield valuation a note standard financial theory in the absence of agency costs and personal taxes implies that each dollar of debt contributes to the value of the firm in proportion to the firm s tax rate to derive this result incremental debt is assumed permanent this paper shows that when the firm acts to maintain a constant market value leverage ratio the marginal value of debt financing is much lower than the corporate tax rate since hamada s 2 unlevering procedure for observed equity betas was derived under the assumption of permanent debt we derive an unlevering procedure consistent with the assumption of a constant leverage ratio implicit in the modigliani miller 4 hypothesis regarding the effect of leverage changes on firm value is that the firm maintains a constant level of debt the purpose of this paper is to examine the implications for tax shield valuation of maintaining a constant market value leverage ratio instead of a constant debt level assuming a constant leverage ratio instead of a constant debt level does not imply any change in the normative implications of capital structure theory however we show that when the firm s financing strategy is to maintain a constant market value leverage ratio the marginal value of a change in debt level resulting from a change in this leverage ratio is much lower than the corporate tax rate we also derive the relationship between the firm s equity beta and its unlevered beta under the assumption of a constant leverage ratio

the samuelson condition and the lindahl scheme in networks abstract we study optimal provision of public goods in the network showing that the samuelson condition and the lindahl scheme can both be substantially extended to characterize the expenditure on such public goods couched in terms of the structure of the network the extended samuelson condition and lindahl scheme formulate precisely how the local publicness of a local public good fundamentally determines its optimal provision and the personalized price that the lindahl tax payer faces independence of the optimal allocation from the distribution of resources at interior samuelsonian solutions in the network generally fails to hold even for the bergstrom cornes preferences

human resource management and performance in european firms we develop a theoretical framework to examine three hypotheses on the relationship between human resource management hrm practices and organisational performance in european firms the first is that collaborative forms of hrm practice are more strongly associated with superior firm performance than calculative forms the second is that these associations are strongest where national institutional and normative settings support them the third is that employer employee consultative committees and collective payment methods are also associated with superior firm performance the first two propositions are strongly empirically supported as is the third albeit more weakly the implications of the findings for european policy and varieties of capitalism theory are discussed

is poor worker morale costly to firms in 1985 and 1990 studies norsworthy and zabala reported evidence supporting the hypothesis that declining worker morale has reduced productivity and productivity growth this study partly replicat

the debt tax shield in general equilibrium abstract we study the general equilibrium effects of the corporate debt tax shield in an endowment economy with a redistributive tax system that taxes firm profits and household income and redistributes tax revenues in an attempt to harmonize households lifetime consumption opportunities in general equilibrium the debt tax shield not only affects corporate capital structure and valuation but also causes poorer households to consume more and save less at a younger age without the debt tax shield the same welfare improvements for poorer households are achievable with significantly lower tax rates

value and capacity of tax shields an analysis of the slicing approach abstract correctly valuing tax shields has been a challenge in corporate valuation a recent study by liu 2009 introduces the slicing approach to separating the tax shield into the earned and unearned parts liu also shows that the mm results are wrong and claims that the slicing approach has finally resolved the issue of pricing tax shields thereby bringing closure to the topic however through careful analysis we refute liu s main claims and restore the mm results there are still open questions and the topic is not completely resolved as claimed in liu 2009