Munich Personal RePEc Archive

Tax, Stimuli of Investment and Firm Value

Maoz, Yishay (2007): Tax, Stimuli of Investment and Firm Value.

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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.

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