Tax asymmetries, the cost of capital and investment

Devereux, Michael (1989) Tax asymmetries, the cost of capital and investment. Economic Journal, 99 (395). pp. 103-112.


A measure of the cost of capital is developed that incorporates the dynamic effects of tax changes and tax asymmetries. Estimates of the cost of capital are made using an unbalanced panel of 1987 U.K. quoted companies over the period 1971 to 1984. There is wide cross-sectional variation in the cost of capital. The measure is used in estimating an equation where this cross-sectional variation is found to be a significant determinant of the level of company investment.

Item Type: Article
Keywords: corporation tax; capital investments; public finance
Subject(s): Taxation
Centre: Oxford University Centre for Business Taxation
Date Deposited: 05 Dec 2011 15:23
Last Modified: 02 Oct 2018 12:49

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