Valuation of Companies and Projects Under Differential Personal Taxation

Posted: 12 Jan 2010

See all articles by Martin Lally

Martin Lally

Capital Financial Consultants Ltd

Date Written: 2000

Abstract

This paper develops formulae for the valuation of companies and projects where there is both differential personal taxation of dividends and interest arising from dividend imputation, and differential taxation of interest and capital gains. The former has been addressed in the literature. This paper represents an extension to recognize both phenomena. It is also shown that valuation errors from ignoring these phenomena are all significant, with the errors from ignoring the interest/capital gains tax differential being at least as great as those from ignoring imputation. Thus, a valuation formula that allows for both phenomena is indicated.

Keywords: Company valuation, Personal taxation, Dividends, Imputation, Capital Gains

JEL Classification: G12, G31

Suggested Citation

Lally, Martin, Valuation of Companies and Projects Under Differential Personal Taxation (2000). Pacific-Basin Finance Journal, Vol. 8, No. 1, 2000, Available at SSRN: https://ssrn.com/abstract=1535038

Martin Lally (Contact Author)

Capital Financial Consultants Ltd ( email )

Wellington 6012
New Zealand
64 4 4768645 (Phone)

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