Noe, Thomas and Kale, Jayant R (1990) Corporate hedging under personal and corporate taxation. Managerial and Decision Economics, 11 (3). pp. 199-205.
Researchers have argued that financial distress costs and corporate tax shields can induce value-maximizing corporations to hedge their operating cash flows. We demonstrate that, for a fixed level of debt in the capital structure, the presence of personal income taxation and corporate non-debt tax shields may cause hedging to lower the value of the firm. When the hedging decision is evaluated at the optimal capital structure, hedging increases firm value.
|Keywords:||Hedging; Taxation; Public financing|
|Centre:||Faculty of Finance|
|Date Deposited:||11 Feb 2012 18:34|
|Last Modified:||23 Oct 2015 14:07|
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