Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5089885 | Journal of Banking & Finance | 2011 | 8 Pages |
Abstract
Correctly valuing tax shields has been a challenge in corporate valuation. A recent study by Liu (2009) introduces the slicing approach to separating the tax shield into the earned and unearned parts. Liu also shows that the MM results are wrong, and claims that the slicing approach has finally resolved the issue of pricing tax shields, thereby bringing closure to the topic. However, through careful analysis, we refute Liu's main claims and restore the MM results. There are still open questions and the topic is not completely resolved as claimed in Liu (2009).
Related Topics
Social Sciences and Humanities
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Economics and Econometrics
Authors
Howard Qi,