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A note on depreciation allowances, taxation and risk-taking

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  • Konrad, Kai A.

Abstract

Incentive effects of depreciation rules for risk-taking are considered. If true economic depreciation is stochastic, profit taxes with expected-value depreciation allowances decrease risk-taking. However, if real capital is used only in the risky sector, more generous depreciation allowances increase risk-taking. It is also shown that the incentive effect of risk-taking-revenue taxes to increase the risky fraction ofinvestment is stronger in the case ofmore generous depreciation allowances.
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  • Konrad, Kai A., 1990. "A note on depreciation allowances, taxation and risk-taking," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 3(2), pages 161-165.
    • Handle: RePEc:zbw:espost:122982
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    11. repec:bla:jfinan:v:43:y:1988:i:2:p:357-73 is not listed on IDEAS
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