search query: @indexterm taxation / total: 1872
reference: 557 / 1872
| Author: | Chemmanur, T. J. Ravid, S. A. |
| Title: | Asymmetric information, corporate myopia, and capital gains tax rates: An analysis of policy prescriptions |
| Journal: | Journal of Financial Intermediation
1999 : JUL, VOL. 8:3, p. 205-231 |
| Index terms: | Taxation Capital Companies Policy Models |
| Language: | eng |
| Abstract: | This paper develops a model of corporate myopia in which the interaction btw. asymmetric information and short-term trading by equity holders induces firms to undertake short-term rather than long-term projects, which are intrinsically more valuable. The effectiveness of alternative policy prescriptions is studied in eliminating myopia. It is shown that a capital gains tax cut for long-term equity holders induces optimal project selection. Characterized is the long-term capital gains tax rate which eliminates corporate myopia. |
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