Over the last ten years a series of empirical studies have been published that claim to test by statistical methods whether corporations, faced with the imposition of a tax on their business income, can in the short-term increase the gross profits so as to maintain their net of tax rate of return on capital. These studies have used various methods but the results yield contradictory evidence as to whether the proposition could or could not be accepted as having validity. The results suggested that a fresh look at the theoretical analysis on the corporate tax be undertaken. The methodology followed was to make a series of simplifying assumptions such that focus could be directed towards an examination of decision-making within the firm and within the industry on which the tax was imposed. For the firm the effective rate of tax is dependent not only upon the statutory rate of tax but also upon the depreciation provisions in force; with an effective tax rate greater than zero, the tax ceteris paribus reduces the rate of return on investment projects. However, it was found that to gain fuller results as to the effect of the tax, more detailed specification of the environment within which the firm operates is needed. The classical models of pure competition and pure monopoly were studied; short-run profit maximisation is assumed in such models. The tax imposition led to the prediction that the after-tax rate of return fell in the short-run; in the long-run if the tax imposed on normal profits, capital moved out of the industry. Consideration was then given to oligopolistic industries. Profit maximisation was still assumed, but with the realisation that over the planning horizon the firm, departures from full short-run profit maximisation were probable. The reasons for such behaviour were examined. The tax was then imposed. In particular cases the tax affected the constraints to allow price increases and an increase in the gross rate of return. In others the constraints remained unchanged and no short-run alleviating action was possible. Relaxation of the assumptions of the theoretical analysis was then allowed, so that testable predictions could be put forward. Several of the recent studies were then examined to see whether their framework, data and estimating equations were adequate to test the hypotheses put forward. The conclusion drawn was that the use of annual time series over forty years was inadequate for such a purpose. / Arts, Faculty of / Vancouver School of Economics / Graduate

Providing incentives to foster industrialization has been much in vogue in the developing countries in recent years. It is felt that, in the spree of enthusiasm to provide incentives to industries, the question of whether these incentives are appropriate to the economic problems at hand may not always be considered by the national government to the extent they desired. This study deals specifically with the tax incentives by way of corporate income taxation in Canada and Singapore. The purpose of this comparative study is to draw out the significant similarities and differences in the economic backgrounds and approaches by a system of tax incentives to assist in solving the underlying economic difficulties. It appears that in Canada incentives by way of corporate income taxation may not have had the anticipated impact on the Canadian economy. Many of the Canadian tax incentives seem to be too short-lived to influence long-term business investment decisions. In Singapore, possibly because of the urgency of its economic problems, the tax incentive legislation permits a long term use of the incentives which may therefore have a greater impact in influencing the long-term structure of the economy. The conclusion has been reached that in spite of the vastly marked social, economic and geographic differences between the two countries they have, however, employed substantially similar incentives to varying extent to stimulate the economies toward industrial development, although the economic environments of the two countries seem to require different approaches. / Business, Sauder School of / Graduate

The purpose of this study was to determine whether a model based upon the dividend formulation of Myron J. Gordon provides an adequate explanation of the variation in common stock prices. In particular, the hypothesis tested is that investors mainly consider dividends, the rate of growth in dividends and the risk characteristics of the firms in valuing shares of common stock. The model was tested by using multiple regression analysis on a cross-section of U.S. companies in the machinery industry in each of the years 1956 to 1965. Alternative measures or proxies for "normalized" earnings, growth, business risk and financial risk were used in testing the model. Empirical results supported the proposition that Gordon's model provides an adequate explanation of the variation in stock prices. On average, between 76% and 81% of the total variation was explained by the model over the ten-year period. The R² values for each year ranged between .68 and .90. The coefficients of the dividend, growth and size variables were significant at the 5% level or better in almost all the years tested and except for growth in two years, these coefficients had the sign indicated by the theory. Business risk and financial risk performed poorly as explanatory variables. The coefficients for both variables were not statistically significant at the 5% level in most years and the business risk coefficient frequently did not have the expected sign. / Business, Sauder School of / Graduate

M.Com. (Business Management) / Please refer to full text for abstract

In the first essay, I examine how managerial opportunism affects corporate investment efficiency and, ultimately, firm performance. Prior research establishes corporate investment efficiency as a function of the firm’s information environment and internal governance. To measure managerial opportunism, I use an ex-ante firm level measure of managerial opportunism based on insider trading patterns and test its effects on investment efficiency and performance. Extant research associates opportunistic insider trading with opaque information environments about the firm and weak firm governance, making it an apropos proxy for opportunistic managerial behavior. Despite the clear establishment of opportunistic insider trading as an agency problem in the literature, it remains unanswered how the managerial insider trading decision’s economic irrationality might reflect a broader agency problem that affects firm investment policy and performance. I introduce competing hypotheses that managerial opportunism may positively associate with overinvestment through “empire building” and excessive risk taking at shareholders’ expense. On the contrary, manv agerial opportunism may lead to underinvestment through rent seeking behavior. My results show that managerial opportunism decreases firm investment efficiency and negatively affects accounting and stock performance. Further tests show that both the quality of the information environment and internal governance moderate the effects of managerial opportunism, providing a unique perspective on how insider trading policy and regulation can affect corporate investment policy. / Includes bibliography. / Dissertation (PhD)--Florida Atlantic University, 2021. / FAU Electronic Theses and Dissertations Collection

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Thesis (M. Phil.)--University of Hong Kong, 2006. / Title proper from title frame. Also available in printed format.

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