Erschienen in:CESifo Working Paper Series ; No. 1801
Umfang:
1 Online-Ressource (25 p)
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Nicht zu entscheiden
DOI:
10.2139/ssrn.935023
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Entstehung:
Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments September 2006 erstellt
Beschreibung:
This paper reconsiders Sinn's (1991) nucleus theory of the corporation by comparing two different regimes for the equity trap. In the first of these, all cash paid to the shareholders is taxed as dividends, in the second, shareholders are allowed a tax-free return of capital contributed through new issues. A substantial difference is found between the regimes in the size of initial equity injections, although in both regimes, no dividends are paid until a new long-run equilibrium is reached. Contrary to Sinn, we find that with optimal behavior, the cost of new equity is lower than suggested by conventional formulae