Suchergebnisse

This article deals with the proper procedure for calculating Tax Shields (TS). The calculation includes cases where Losses Carried Forward are allowed and there is financial Other Income (OI). The procedure takes into account the magnitude of Adjusted Earnings before Interest and Taxes (EBITAdj) -that is, EBIT + OI - OE excluding Financial- compared with Financial Expenses (FE). This comparison defines three intervals and results for TS. If EBITAdj. < 0, TS will be 0; if EBITAdj. > 0 and less than FE, TS is T x EBITAdj.; finally if EBITAdj. > FE, TS is T x FE. When firm possesses OI, TS are not equivalent to the difference in taxes and an adjustment is needed. Proper calculation of TS is important because their value might represent a substantial part of firm value.

The Financial Accounting Standards Board (FASB) is considering modification of the method of accounting for employee stock options. It has tentatively decided that goods and services received in exchange for all forms of stock-based compensation should be recognized as an expense and that this expense should be measured at fair value. A major issue to be considered during the deliberations by the FASB concerns the valuation models used to estimate the fair value of stock options and therefore the expense to be recognized. This article reviews the current status of the valuation of employee stock options and suggests two different valuation models that result in lower reported expense on the income statement.

AbstractIn an inflation‐non‐indexed progressive tax system, inflation results in a "bracket‐creep" effect that reduces the demand for corporate debt while the tax‐deductibility of nominal interest makes the use of debt financing cheaper. The interactive effect of inflation and differential dividend and capital gains taxes on the value of a levered firm is analyzed in this paper. Under a non‐indexed progressive tax system, inflation decreases the value of the unlevered firm but the effect of inflation on the firm's debt‐to‐asset ratio is theoretically indeterminate. The gain from leverage is also derived and compared with other valuation models.