scholarly journals Nonprofits and Pass-Throughs: Performance Comparison

2021 ◽  
Vol 9 (1) ◽  
pp. 13
Author(s):  
Robert Hull ◽  
Shane Van Dalsem
Keyword(s):  
Growth Rates ◽  
Firm Value ◽  
Real Data ◽  
Performance Comparison ◽  
Tax Rates ◽  
Robust Tests ◽  
Key Variables ◽  
Optimal Leverage ◽  
Scientific Value ◽  
Retained Earnings

This paper’s purpose is to compare nonprofits with pass-throughs in terms of valuation, leverage, and growth. To achieve this purpose, we use the Capital Structure Model. This model determines maximum firm valuation through incorporating real data (tax rates, credit spreads, and historical growth rates). Since this is the first study to offer our particular set results on valuation, leverage and growth, our findings are value-additive in terms of the comparative research on nonprofits and pass-throughs. The new and scientific value of our findings are further established by robust tests that modify values for key variables. Major findings include the following. Nonprofits have over a fifty percent valuation advantage over pass-throughs and achieve a four times greater increase in dollar value when going from nongrowth to growth. The latter accomplishments are attained with a smaller before-tax plowback ratio and less retained earnings. Such achievements occur because nonprofits are not taxed on earnings retained for growth. While nonprofits have somewhat greater optimal leverage ratios than pass-throughs, they gain a bit less in dollars added from debt unless growth rates increase as projected when tax rates are lowered. Nonprofits gain less percentage-wise from debt because their unlevered firm value is greater than pass-throughs.

Effect of Profitability, Company Size, Capital Structure, and Liquidity Risk on Firm Value of Indonesian Banks

2021 ◽  
Vol 4 (1) ◽  
pp. 14-27
Author(s):  
Fenty Fauziah ◽  
Rafiqoh Rafiqoh
Keyword(s):  
Capital Structure ◽  
Firm Value ◽  
Stock Exchange ◽  
Linear Regression Analysis ◽  
Sample Selection ◽  
Liquidity Risk ◽  
Share Price ◽  
Company Size ◽  
The Public ◽  
Retained Earnings

The main objective of any firm is to maximize shareholder's wealth, which can be seen from firm value.  This study aims to analyze and explain the effect of profitability, company size, capital structure, and liquidity risk on firm value banking companies in Indonesia. The population of this study is all banking companies listed on the Indonesia Stock Exchange, with an observation period of 2017-2018. The sample selection using a purposive sampling method. Data have both cross-section and time variation. Analysis and hypothesis testing were carried out by using a linear regression analysis using Eviews 11. The results showed that investors viewed that the company's overall profits from its business activities could increase its share price. The capital structure owned by the public relatively small, which meant that the company could provide a source of funds from within the company in the form of the owner's capital or retained earnings. Funds obtained from loans, if they were not followed by the ability to manage funds or were not channeled back to the community, would cause interest expenses and destroy profits. This condition results in investors selling their shares. Investors in making investment decisions paid attention to one indicator at a time and paid attention to all the factors that determined the company's value.

scholarly journals Opodatkowanie gospodarstw rolnych w Polsce podatkiem dochodowym od osób fizycznych

2017 ◽  
Vol 1 (3) ◽  
Author(s):  
Mikołaj Mielczarek
Keyword(s):  
Income Tax ◽  
Municipal Government ◽  
Empirical Studies ◽  
The State ◽  
Farm Income ◽  
Tax Rates ◽  
The European Union ◽  
State Budget ◽  
Literature Research ◽  
Scientific Value

Aim: The paper deals with the subject of the shift in Poland's form of agricultural taxation from agricultural tax to personal income tax. The author decided to explore this topic since the taxation of agriculture is an important issue from the standpoint of economic practice. In addition, a similar solution exists virtually in all the European Union countries. The research objective of this paper is an attempt to assess the fiscal consequences for the state arising from the change of the agricultural taxation form.Design/Research methods: The paper employs literature research and examines legal acts, as well as conducts empirical simulation. The literature research and that concerned with legislation were aimed at presenting the forms of agricultural taxation in the EU countries and the approaches to taxing agricultural incomes. The empirical simulation of fiscal effects of agricultural taxation in Poland has been carried out in three scenarios: general (using different sample rates), comparing with agricultural tax, and revenues distribution across the state budget and territorial self-government units.Conclusion/findings: The empirical studies conducted for the years 2010-2014 have shown that replacing agricultural tax with income tax would be a good solution for farmers, provided that low tax rates were to be applied. At higher rates, this solution would be unfavorable. At the same time, the replacement of agricultural tax with income tax would benefit the state and regional governments and counties, as their budgets would gain additional tax revenues. On the other hand, the municipal government would benefit with the application of tax rates higher than 10%.Originality/value of the paper: In the context of the existing research, the scientific value of the paper consists in the comparison of the amount of agricultural tax receipts with those from the farm income taxation.

Economic freedom and growth across German districts

2017 ◽  
Vol 14 (4) ◽  
pp. 739-765 ◽  
Author(s):  
ROK SPRUK ◽  
ALEKSANDAR KEŠELJEVIĆ
Keyword(s):  
Public Sector ◽  
Beneficial Effect ◽  
Growth Rates ◽  
Economic Freedom ◽  
Sample Selection ◽  
Tax Rates ◽  
Income Levels ◽  
East German ◽  
The Government ◽  
The Relationship

AbstractIn this paper, we revisit the relationship between economic freedom and growth across 407 German districts (Kreise). We build six indicators of economic freedom and cluster them into categories reflecting tax rates and size of the government and public sector. Exploiting the variation in the constructed indices of economic freedom, the evidence suggests less indebted districts with a lower share of taxes and a relatively smaller public sector achieve consistently higher growth rates and income levels. The beneficial effect of economic freedom on growth is robust to the variety of specification checks and does not appear to be driven by sample selection. The evidence does not indicate a lower level of economic freedom in former East German districts or greater economic freedom in West German districts but unveils a persistent north–south divide in the post-unification period. In the counterfactual scenario, a transition to the 90th percentile of economic freedom is associated with large income and growth gains. Such a transition would yield higher income levels and growth rates with a notable decrease in regional economic inequality within Germany.

The Politics of Scotland’s Public Finances

2020 ◽  
pp. 511-542
Author(s):  
David Heald
Keyword(s):  
Economic Performance ◽  
Growth Rates ◽  
Income Tax ◽  
Tax Rates ◽  
Fiscal Responsibility ◽  
Relative Population ◽  
Public Finances ◽  
The Public ◽  
Scottish Parliament ◽  
Fiscal Centralization

Politics and fiscal mechanics play interwoven roles in the public finances of devolved Scotland. Asymmetric devolution, in the context of divergent economic performance and relative population size and growth rates, has contributed to the longevity of the Barnett formula. Though criticized for either overfunding or underfunding Scotland, its resilience stems from its role as political convention in reducing overt conflict, and from maintaining the expenditure autonomy of the Scottish Parliament. The low level of self-financing from devolved taxes stimulated allegations that the Parliament lacked accountability and fiscal responsibility. Extended taxation powers advanced through the cautious Calman Commission to the rushed Smith Commission, and were driven by imperatives for a ‘counter-offer’ after the 2014 Independence Referendum. The early operation of the 2016 Scottish Fiscal Framework and the divergence of UK and Scottish income tax rates highlights the practical issues of devolved tax policy in the context of UK fiscal centralization. These developments have been driven by changes in Scottish political circumstances rather than by changes in fiscal fundamentals.

scholarly journals Testing financial time series for autocorrelation: Robust Tests

2020 ◽  
Vol 27 (3) ◽  
pp. e96
Author(s):  
Nelson Omar Muriel Torrero
Keyword(s):  
Time Series ◽  
Stock Returns ◽  
Financial Time Series ◽  
Real Data ◽  
Small Sample ◽  
Small Sample Properties ◽  
Robust Tests ◽  
Daily Stock Returns ◽  
Portmanteau Statistics ◽  
Empirical Size

Two modified Portmanteau statistics are studied under dependence assumptions common in financial applications which can be used for testing that heteroskedastic time series are serially uncorrelated without assuming independence or Normality. Their asymptotic distribution is found to be null and their small sample properties are examined via Monte Carlo. The power of the tests is studied under the MA and GARCH-in-mean alternatives. The tests exhibit an appropriate empirical size and are seen to be more powerful than a robust Box-Pierce to the selected alternatives. Real data on daily stock returns and exchange rates is used to illustrate the tests.

scholarly journals Korean Firms’ Share Repurchase Activities: Firm Characteristics, Financing and Investment

2020 ◽  
Vol 49 (5) ◽  
pp. 643-679
Author(s):  
Jin Park ◽  
Hyunseok Kim ◽  
Jungwon Suh
Keyword(s):  
Cash Flow ◽  
Firm Value ◽  
Univariate Analysis ◽  
Payout Policy ◽  
Share Repurchases ◽  
Share Repurchase ◽  
Listed Firms ◽  
Internal Funds ◽  
Financing And Investment ◽  
Retained Earnings

This study examines Korean listed firms’ share repurchasing activities over the period 2006~2016 using the amount of net share repurchases from annual statements of cash flow. Korean firms use dividends rather than share repurchases as their primary payout method. Each year, the proportion of share repurchasing firms is lower than 20%, whereas the proportion of dividend-paying firms is around 70% or higher. Univariate analysis and Tobit regressions reveal that the incidence and amount of share repurchases increase with firm value, size, and cash flow. Our findings do not suggest that low valuations (or poor stock performance) or low debt ratios motivate share repurchases. Korean firms use primarily internal funds to finance share repurchases, as share repurchasing firms experience substantial increases in retained earnings. Share repurchasing firms do not invest less than other firms do, suggesting that share repurchases do not result in underinvestment. Compared to dividends, share repurchases are more positively associated with firm value. Compared to share repurchase, dividends are more positively associated with cash flow and financial maturity, but more negatively associated with stock return volatility. Finally, firms with high controlling shareholders’ ownership tend to choose dividends over share repurchases in their payout policy.

scholarly journals Pengaruh Profitabilitas terhadap Nilai Perusahaan dengan Moderasi Pengungkapan Elemen-Elemen Integrated Reporting

2021 ◽  
Vol 31 (4) ◽  
Author(s):  
Gilang Ryanda Bhimantara ◽  
Agung Dinarjito
Keyword(s):  
Firm Value ◽  
Sampling Method ◽  
Stock Exchange ◽  
Result State ◽  
Integrated Reporting ◽  
Dividend Distribution ◽  
Relationship Of ◽  
Retained Earnings ◽  
The Relationship ◽  
A Company

This paper aims to determine the effect of profitability on firm value and the moderation of disclosure of integrated reporting elements in influencing the relationship of profitability with firm value. The sample is representative of each sector using the purposive stratified sampling method. This research is a quantitative study using a sample of 86 companies listed on the Indonesia Stock Exchange (BEI). Data were analyzed using multiple linear regression and processed using the Stata 13 application. The results show that profitability has no effect on the value of the company. Investors still need to consider the information generated from profitability because of the option to put into retained earnings and dividend distribution that will be taken by the company. The other result state that the integrated reporting elements do not affect the relationship of profitability with firm value because the value of information in the disclosure element is not directly related to the financial information (numbers) of a company. Keywords: Profitability; Firm Value; Integrated Reporting.

scholarly journals Pass-Through and C Corp Outputs under TCJA

2020 ◽  
Vol 8 (3) ◽  
pp. 46
Author(s):  
Robert Hull
Keyword(s):  
Corporate Finance ◽  
Firm Value ◽  
Credit Ratings ◽  
Percentage Increase ◽  
Tax Rates ◽  
Ceteris Paribus ◽  
Maximum Gain ◽  
Growth Increase ◽  
Pass Through ◽  
Jobs Act

Corporate finance research focuses on C corps (CCs) neglecting pass-throughs (PTs). We answer this neglect by examining PT outputs for the categories of debt choice, valuation, and leverage gain. In the process, we expand on the nongrowth PT research and supplement the recent CC research on the same outputs. Before the Tax Cuts and Jobs Act (TCJA) became effective in January 2018, PTs had an after-tax valuation advantage over CCs. Under TCJA, we demonstrate this advantage has been reverse. This suggests that, ceteris paribus, a typical PT can now find it advantageous to switch to the CC ownership form. More importantly, we show that nongrowth firm values are comparable to growth firm values unless we assume a rise in growth consistent with projections under TCJA where tax rates are lower. We demonstrate this projected growth increase is the key to make businesses more profitable. Additionally, we show PTs achieve optimal debt-to-firm value ratios (ODVs) well below those for CCs; PTs generally attain slightly higher quality credit ratings at their ODVs compared to CCs; and, PTs have lower leverage gains outputs (in the form of the maximum gain to leverage and the percentage increase in unlevered firm value) compared to CCs.

Financing agricultural cooperatives with retained earnings

2017 ◽  
Vol 77 (3) ◽  
pp. 393-411 ◽  
Author(s):  
Jeffrey Royer
Keyword(s):  
Cash Flow ◽  
Balance Sheet ◽  
Agricultural Cooperatives ◽  
Tax Rates ◽  
Present Value ◽  
Content Type ◽  
Marginal Tax Rates ◽  
Patronage Refunds ◽  
Parameter Values ◽  
Retained Earnings

Purpose The purpose of this paper is to explore the advantages equity capitalization programs based on retained earnings from patronage sources may provide cooperatives and their patrons that traditional equity financing methods do not offer. Design/methodology/approach The analysis is based on a model used to assess patron benefits from a cooperative that is financed by a combination of allocated equity acquired from noncash patronage refunds and unallocated equity acquired from retained earnings. The level of patron benefits is represented by the present value of the after-tax cash flow patrons receive from the cooperative, and the model is used to determine the combination of noncash patronage refunds and retained earnings that provides the greatest present value given the levels of those parameters that affect capitalization of the cooperative and the distribution of cash benefits to patrons. Findings The analysis demonstrates that only pure plans, i.e., plans based entirely on retained patronage refunds or entirely on retained earnings, will be associated with the greatest present value for any particular set of parameter values. Cooperatives that are characterized by low marginal tax rates and growth rates and whose patrons are characterized by high marginal tax rates and discount rates are those most likely to benefit from equity capitalization programs based on retained earnings. Research limitations/implications The model is based on the assumption of constant parameter values and does not account for the existence of nonpatronage income. Practical implications A useful extension of this work would be the development of a decision aid capable of generating basic operating statement and balance sheet data and enabling cooperative decision makers to conduct experiments concerning alternative financing strategies based on retained earnings. Originality/value The analysis contained in this paper is based on an explicit model and extends across a broad range of values for various parameters that affect the level, timing, and present value of cash distributions from cooperatives. Because the cash flow received by patrons is determined after the cooperative’s planned equity growth is met, cash flow comparisons are equivalent with respect to the capital provided the cooperative. In addition, the revolving period is endogenously determined.

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