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| Author: | Bogner, S. Frühwirth, M. Schwaiger, M. |
| Title: | DCF valuation and imputed interest on equity increase - implications of the Austrian tax system in a model with stochastic profitability |
| Journal: | Schmalenbach Business Review
2004 : JUL, VOL. 56:3, p. 223-257 |
| Index terms: | Discounted cash flow Interest rates Stochastic processes Taxation Valuation Austria |
| Language: | eng |
| Abstract: | In the early 1980s, many European countries implemented tax systems with imputed equity interest provisions. Since the tax reform in 2000, Austria has also allowed the deduction of (ficitious) imputed equity interest from the tax base. This article integrates the resulting equity-related tax benefits into the valuation of corporations. The value of a business in a multi-period model is calculated using the equity method with special attention to the deductibility of imputed equity interest. The results show that a market-to-book ratio is endogenous to the model results. |
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