Corporate hedging under personal and corporate taxation

Noe, Thomas and Kale, Jayant R (1990) Corporate hedging under personal and corporate taxation. Managerial and Decision Economics, 11 (3). pp. 199-205.

Abstract

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.

Item Type: Article
Keywords: Hedging; Taxation; Public financing; finance
Subject(s): Finance
Date Deposited: 11 Feb 2012 18:34
Last Modified: 02 Mar 2017 10:50
Funders: N/A
URI: http://eureka.sbs.ox.ac.uk/id/eprint/2639

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