Effects of corporate tax rate cuts on firms' investment and valuation: A microsimulation approach

Keiichi Kubota, Hitoshi Takehara

研究成果: Conference contribution

抄録

This paper investigates changes in firm values triggered by a hypothetical corporate tax rate cut for Japan. We use multiplicative production functions and firms' investment decision changes over time via the accumulated process of retained earnings on the simulated path. We find changes in corporate tax rates can enhance the market value of firm equity in most cases, while there are some cases in which the effects are neutral or even detrimental for firm value. We interpret that these mixed results are caused by joint effects of current provisions of tax loss carry-forward and the net balance of tax deferred accounts. We find that past profitability and variability of each firm is crucial to hit exact threshold points at which firms experience value appreciations or not. The results possess important implications to both regulators and corporate financial managers.

本文言語English
ホスト出版物のタイトルAdvances in Social Simulation - Proceedings of the 9th Conference of the European Social Simulation Association, ESSA 2013
出版社Springer Verlag
ページ155-165
ページ数11
ISBN(印刷版)9783642398285
DOI
出版ステータスPublished - 2014
イベント9th Conference of the European Social Simulation Association, ESSA 2013 - Warsaw, Poland
継続期間: 2013 9 162013 9 20

出版物シリーズ

名前Advances in Intelligent Systems and Computing
229 AISC
ISSN(印刷版)2194-5357

Conference

Conference9th Conference of the European Social Simulation Association, ESSA 2013
国/地域Poland
CityWarsaw
Period13/9/1613/9/20

ASJC Scopus subject areas

  • 制御およびシステム工学
  • コンピュータ サイエンス(全般)

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