A below market assumable mortgage may imply a discount in the financing costs of prospective property buyers. Sellers may capitalize any discount value into their asking price for the property. Residential properties sold with below market assumption financing may therefore include a capitalized discount in their selling price. This study empirically tests the hypothesis that below market assumption financed residential properties include a capitalized discount in their observed selling price and obtains both a parametric and nonparametric estimate of the average discount capitalization rate. The hypothesis is tested on a large-scale sample of residential condominium sales that occurred in Vancouver over the 13 year period from 1974 to 1986. Both the hedonic pricing and matched pairs methodologies are employed to control for non-financial differences among the sampled transactions. The theoretical value of assumption financing discounts is measured using a modified Cash Equivalent Adjustment model. This study concludes that Vancouver condominiums sold with discount assumption financing do, on average, include a capitalized discount in their selling price. The hedonic price estimate of the average discount capitalization rate is approximately 75 percent of the modified Cash Equivalent discount value; the matched pairs estimate is approximately 50 percent of the modified Cash Equivalent discount value. The average discount capitalization rate appears to be stable across periods of high and moderate inflation. / Business, Sauder School of / Graduate

Over the years there has been significant research around the misspecification of the Capital Asset Pricing Model (CAPM), which challenges the linear relationship between beta and market returns. One of the biggest challenges relates to the “small-firm effect,” which states there are two classifications of stocks (large and small) and that the companies with small-market capitalizations have higher returns. However, the definition of a small-cap is vague and there has been little focus in academia on the stocks in the middle-market capitalization deciles. Despite this, institutional and retail investors created the “mid-cap” category in the early 1990s and, since then, the risk-adjusted returns have been exceptional, relative to small- and large-cap stocks. This study examined mid-cap stocks from an academic perspective and delves into the “mid-cap myth” by evaluating the category over the past 85 years to answer the question around whether mid-caps are superior to other asset class. The results revealed that the highly touted and advertised mid-cap stock performance premium during the 1980-2013 time period was statistically insignificant. Moreover, mid-caps did have superior risk-adjusted returns over the extended time period studied (1928 to 2014); however, these superior returns relative to small-caps were not driven by the uniqueness of the mid-sized companies, but by the underperformance of small-cap stocks, specifically small-cap growth stocks. When studying the behavior or migration of mid-size companies, they do not appear to exhibit unusual behavior relative to companies with smaller market capitalizations, especially in the area of mergers and acquisitions. Thus, the question becomes why small-cap companies underperform relative to their risk level. The answer lies in the inclusion of the NASDAQ stocks to the CRSP database after 1972. This change not only doubled the number of stocks deemed small-caps, but also added a significant number of unprofitable fast-growing companies to the small-cap growth category, specifically in the technology and healthcare industries. The study benefits practitioners by providing insight into the omnipresent claim of mid-cap outperformance from 1980-2014, while also benefiting academia by providing more insight into small-caps’ underperformance during this period and how investigating small-cap growth companies further could add insight into the viability or magnitude of the size and value premium going forward.

International trade theory emphasizes the "real"factors. In standard models of international trade surveyed by Jones and Neary (1984), factor supplies play a key role in determining trade patterns. The pattern as well as the volume of trade is usually explained by the defference in comparative advantages. Through trade, countries can exploit these advantages and make more efficient use of resources. The determination of exchange rates is seen as the resoult of monetary policies in different countries. The distinction between trade and finace has been mitigated due to an important paper by Stockman (1985) who integrate a transactionsbased model of money with a real trade model. He analyzed the effect of inflation on international trade using a cash-in-adcance(CIA) model. In his setup, inflation depresses capital accumulation because the rate of return on investment is reduced. This"factor-supply"effect will cause the volume of trade to change. Since Stockman used a Heckscher- Ohlin-Samuelson model, it also follows that a small change in the rate of inflation may cause a dramatic change in domestic production, hence, the pattern of trade might be reversed completely. In this dessertation I shall point out another channel of how inflation affects the trade pattern and volume. I shall study the "demand-substitution"effect due the fact that the cash-in-advance constraint is applied to different sets of goods. When this is so, the CIA constraint impliesa higher opportunity cost of purchasing the constrained goods. Thus, the relative costs of goods under constraint in terms of the goods not under constraint will be subject to the influence of inflation, this is what I mean by "demand-substitution" effect. This dissertation is organized as follows. In section II we will survey the related literature. In section III we describe the model and the five different CIA constraints case, analyze the effect of unanticipated, anticipated and temporary monetary policy. In every case, comparative static exercise are performed. In section IV we make comparison between the three cases, followed by concluding remarks and possible extensions.

Trata-se de dissertação para obtenção do grau de Mestre perante a Faculdade de Direito da Universidade de São Paulo, versando sobre as regras de Subcapitalização no Direito Tributário Brasileiro. O tema central da dissertação pode ser resumido da seguinte maneira: o que são regras de subcapitalização e qual a real necessidade de estabelecimento destas no direito tributário brasileiro, tendo em vista o ordenamento jurídico precedente à publicação das referidas normas. Iniciaremos o trabalho com a contextualização histórica do tema e, na sequência, analisaremos a legislação relativa à subcapitalização no direito comparado, estudando os princípios norteadores, bem como as regras específicas existentes nas diversas localidades estudadas. Estudaremos ainda o sistema jurídico tributário precedente às regras de subcapitalização, bem como analisaremos caso julgado pelo Conselho de Contribuintes, conhecido como caso Colgate/Kolynos, considerado o principal julgado a respeito da matéria no Brasil e que, certamente, foi relevante para o estabelecimento das regras de subcapitalização no Brasil. Por fim, após descrição minuciosa da legislação estabelecida no Brasil, será realizada avaliação crítica, tendo em vista as imperfeições e lacunas verificadas na norma introdutora das regras de subcapitalização no Brasil, a saber, Medida Provisória nº 472/09, de 16 de dezembro de 2009, posteriormente convertida na Lei nº 12.249, de 14 de junho de 2010, bem como da regulamentação expedida pela Receita Federal do Brasil por meio da Instrução Normativa nº 1.154, de 12 de maio de 2011. / This is a dissertation to obtain the Master before the University of São Paulo Law School, about thin capitalization rules in Brazilian Tax Law. The central theme of the dissertation can be summarized this way: what are thin capitalization rules and what is the real need of establishing such rules in the Brazilian Tax Law, considering the previous existing law system. The starting point will be the historical contextualization of the theme and, in the sequel, we will analyze the thin capitalization rules in the foreign law, studying the guiding principles and the existing specific rules in the places studied. It will be studied the legal tax system precedent to thin capitalization rules, as well as it will be analyzed a case judged by Council Taxpayers, known as case Colgate/Kolynos, considered the principal case related to the subject in Brazil which, certainly, was relevant for establishing the thin capitalization rules in Brazil. Lastly, it will also be analyzed in details the rules established in Brazil, including a critical evaluation, in the view of imperfections and gaps verified in the rules which established thin capitalization rules in Brazil, namely, Provisory Measure nº 472, 2009 December 16th, converted into Law nº 12.249, 2010 June 14th, and regulation issued by Federal Tax Authorities, Normative Instruction nº 1.154, 2011 May 12

The function of accounting is to provide users with useful information in making economic decisions. Information regarding goodwill, a major constituent of the value of many listed companies, is likely to be useful in making decisions relating to those companies. A historical review of accounting literature, including professional standards, relating to methods of accounting for purchased goodwill showed that none of them has stood the test of time. The current trend towards an impairment paradigm will not resolve the issue satisfactorily because it produces, at best, a partial solution. The difficulty in accounting meaningfully for goodwill is compounded because, given its foundation in historical cost principles, accounting has been unable to present any information at all with regard to internally generated goodwill within the confines of the traditional Balance Sheet. This, in turn, has led to the evasion of the reality that the two forms of goodwill are inextricably merged. Trying to account satisfactorily for goodwill has been a prime example of R.R. Sterling�s �issues conceived in a way that they are in principle unresolvable�. The problem was accordingly redefined as being to find a method by which the current level of information relating to goodwill in the financial statements contained in a company�s Annual Report could be improved. This thesis seeks to identify a logically defensible method of accounting for goodwill which addresses the redefined problem. It builds upon the historical research undertaken, combined with a priori reasoning, to propose an additional financial statement which is a modification of nineteenth century �double accounting� in a modern context. This statement, which goes far to solve the redefined problem, also furnishes information regarding the company�s market capitalization at balance date and is termed the Market Capitalization Statement (�MCS�). While the idea of furnishing market capitalization data to readers of the Annual Report is not new, it is believed that this is the first time such data has been systematically linked with the Balance Sheet to provide an objective, integrated and meaningful view of goodwill in the financial statements. The practical application and simplicity of the MCS are illustrated by a range of examples drawn from Australian �dot-com� companies over a period of time which saw considerable fluctuation in both goodwill and market capitalization, supplemented by examining data relating to some of Australia�s largest listed companies over the same period. These examples demonstrate that the MCS has the potential to provide significant information not available in conventional financial statements, while freeing the traditional Balance Sheet and Profit and Loss Account to present information in a more meaningful and less distorted way. Finally, the MCS is noted as still being subject to certain problems and distortions in the context of the historical cost basis of the remaining financial statements. It is shown that, if used in the context of an exit price based system, Chambers� CoCoA, many of these distortions are removed. The MCS also complements the information provided by CoCoA as originally formulated.

After a court imposed desegregation plan ended in 1996, the Baton Rouge, Louisiana school district created neighborhood attendance zones for its schools, followed by a series of attendance zone changes. We use data from 1994 to 2002 to examine the impact of changes in school characteristics on simultaneous determination of house prices and liquidity in the market. A simultaneous equations model of sales price and tine-on-market is adopted that extends the hedonic price model by controlling for localized neighborhood market conditions. Our empirical results show that improving and declining school performance can have asymmetric capitalization effects. Further, as indicated by the search-market model, liquidity absorbs part of the capitalization of school quality; for example, declining school performance prolongs houses’ marketing time.

A multinational enterprise may adopt a tax avoidance mechanism under the contribution of paid-in capital to its subsidiary in Taiwan is decreased, while increasing its loans to the subsidiary as much as possible. This may result in the minimization of the taxable income of the subsidiary through the increase in interest expense deduction of the subsidiary. Under such an arrangement, non-deductible dividend payments are replaced with deductible interest payments. Anti-thin capitalization that was originated from the arm's length principle is adopted from Article 9(1) of the OECD Model Tax Convention. Many countries set a fixed debt-equity ratio as a safe harbor to anti-tax avoidance. In this paper, we use factor analysis to find the optimal debt-equity ratio under the optimal capital structure model. The purpose of this study is to find an optimal debt-equity ratio and propose suggestions in order to revise the law and advance tax system.

Capital asset pricing models predict the tax penalty capitalized into expected returns reflects the average tax rate of all investors in a market (average rate theory). To test this theory, I argue stock markets in developed European countries and the U.S. form an integrated market, where the tax capitalized reflects the average rate of investors across these countries. If this is the case, when the U.S. dividend tax rate was cut by 60 percent in 2003, the average rate theory predicts a decrease in the tax capitalized in European stocks. In contrast, firms in less integrated European countries should react significantly less to the U.S. tax cut. Finally, I test a prediction from Desai and Dharmapala (2011) that because of market integration the magnitude of the reaction to the tax cut should be the same for firms in the U.S. and developed European countries. The results in this paper support these predictions.

Šio darbo tikslas įvertinti didelės, vidutinės, mažos kapitalizacijos listinguojamų įmonių kapitalo struktūros sprendimams įtaką darančių veiksnių poveikį. Vertinamas išorinių (akcijų rinkos kapitalizacija nuo BVP, parduotų akcijų vertės rodiklis, akcijų apyvartumo rodiklis) ir vidinių (įmonės dydis, turto grąža, likvidumas, augimo galimybės) veiksnių poveikis kapitalo struktūrai. Darbą sudaro trys dalys. Pirmoje darbo dalyje aptariam teoriniai įmonių kapitalo struktūros aspektai, taip pat apžvelgiami empiriniai tyrimai, kuriuose tiriama įvairių veiksnių įtaka kapitalo struktūrai. Antroje darbo dalyje pristatoma empirinio tyrimo metodologija. Trečioje darbo dalyje pristatomi atlikto skirtingos kapitalizacijos įmonių kapitalo struktūros veiksnių įtakos vertinimo tyrimo rezultatai. Tyrimas atskleidė, kad tarp didelės, vidutinės, mažos kapitalizacijos įmonių kapitalo struktūros ir išorinių bei vidinių veiksnių egzistuoja reikšminga tarpusavio priklausomybė. Nustatyta, kad didelės ir vidutinės kapitalizacijos įmonių kapitalo struktūros kintamumui didesnę įtaką daro vidiniai veiksniai. Taip pat pastebėta, kad iš tirtų vidinių veiksnių didžiausią įtaką turi likvidumas ir turto grąža. Tačiau, mažos kapitalizacijos įmonių kapitalo struktūrai didesnę įtaką daro išoriniai veiksniai. / Many research studies try to evaluate capital structure determinants influence on firm’s financial decisions. The aim of this study is to evaluate the influence of capital structure determinants on large, mid and small capitalization firm’s capital structure. The valuation includes both external and internal factors of the capital structure. This paper consists of three parts. The first part discusses the theoretical aspects of corporate capital structure, provides an overview of conducted empirical studies on the capital structure determinants. The second part presents this paper’s research empirical methodology. The third part of the paper presents empirical results of this research. Large and mid-capitalization firm’s capital structure is more influenced by internal factors. From all internal factors, ROA and liquidity are the factors that do the bigger impact on capital structure. However, small-cap firms are more influenced by external factors.

The function of accounting is to provide users with useful information in making economic decisions. Information regarding goodwill, a major constituent of the value of many listed companies, is likely to be useful in making decisions relating to those companies. A historical review of accounting literature, including professional standards, relating to methods of accounting for purchased goodwill showed that none of them has stood the test of time. The current trend towards an impairment paradigm will not resolve the issue satisfactorily because it produces, at best, a partial solution. The difficulty in accounting meaningfully for goodwill is compounded because, given its foundation in historical cost principles, accounting has been unable to present any information at all with regard to internally generated goodwill within the confines of the traditional Balance Sheet. This, in turn, has led to the evasion of the reality that the two forms of goodwill are inextricably merged. Trying to account satisfactorily for goodwill has been a prime example of R.R. Sterling�s �issues conceived in a way that they are in principle unresolvable�. The problem was accordingly redefined as being to find a method by which the current level of information relating to goodwill in the financial statements contained in a company�s Annual Report could be improved. This thesis seeks to identify a logically defensible method of accounting for goodwill which addresses the redefined problem. It builds upon the historical research undertaken, combined with a priori reasoning, to propose an additional financial statement which is a modification of nineteenth century �double accounting� in a modern context. This statement, which goes far to solve the redefined problem, also furnishes information regarding the company�s market capitalization at balance date and is termed the Market Capitalization Statement (�MCS�). While the idea of furnishing market capitalization data to readers of the Annual Report is not new, it is believed that this is the first time such data has been systematically linked with the Balance Sheet to provide an objective, integrated and meaningful view of goodwill in the financial statements. The practical application and simplicity of the MCS are illustrated by a range of examples drawn from Australian �dot-com� companies over a period of time which saw considerable fluctuation in both goodwill and market capitalization, supplemented by examining data relating to some of Australia�s largest listed companies over the same period. These examples demonstrate that the MCS has the potential to provide significant information not available in conventional financial statements, while freeing the traditional Balance Sheet and Profit and Loss Account to present information in a more meaningful and less distorted way. Finally, the MCS is noted as still being subject to certain problems and distortions in the context of the historical cost basis of the remaining financial statements. It is shown that, if used in the context of an exit price based system, Chambers� CoCoA, many of these distortions are removed. The MCS also complements the information provided by CoCoA as originally formulated.