The value of tax shields IS equal to the present value of tax shields

• 成果类型: Article
• 署名作者: Cooper, Ian A.; Nyborg, Kjell G.
• 署名单位: University of London; London Business School; Norwegian School of Economics (NHH); Centre for Economic Policy Research - UK
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2005.07.003
• 发表日期: 2006
• 页码: 215-225
• 关键词: value of tax shields; leverage policy; adjusted present value; unlevered beta; cost of capital

摘要

Fernandez [2004b. The value of tax shields is not equal to the present value of tax shields. Journal of Financial Economics 73, 145-165] argues that the present value effect of the tax saving on debt cannot be calculated as simply the present value of the tax shields associated with interest. This contradicts standard results in the literature. It implies that, even though the capital market is complete, value-additivity is violated. As a consequence, adjusted present value formulae of a standard sort cannot be used. Also, Fernandez's argument implies that the value of the tax saving differs front conventional estimates by a considerable amount. We reconcile Fernandez's results with standard valuation formulae for the tax saving from debt. We show that, as one would expect, the value of the debt tax saving is the present value of the tax savings from interest. The apparent violation of value-additivity in the Fernandez paper comes from mixing the Miles and Ezzell and Miller and Modigliani leverage policies. (c) 2006 Elsevier B.V. All rights reserved.