Share Valuation and Corporate Equity Policy

  title={Share Valuation and Corporate Equity Policy},
  author={Alan J. Auerbach},
  journal={NBER Working Paper Series},
  • A. Auerbach
  • Published 1 June 1979
  • Economics, Business
  • NBER Working Paper Series
In recent years many contributions have appeared which examine the effects of corporate and personal taxation on firm financial policy. However, there has yet to appear an adequate explanation of why corporations continue to distribute dividends despite their disadvantageous tax treatment. We study this problem anew, in the context of an overlapping generations growth model with corporations financed by equity. Among our findings are: (1) capital owned by corporations may well be undervalued… 
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