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Share repurchases, the ’new’ view, and the cost of capital

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  • Sinn, Hans-Werner

Abstract

This paper counters the view that the possibility of share repurchases invalidates the predictions of the ’new’ (or ’trapped equity’) view of corporate taxation. It is shown that the ’new’ view’s basic cost of capital expression which distinguishes it from the ’old’ view remains valid regardless of the proportions in which corporate distributions of earnings split into share repurchases and ordinary dividend payments.

Suggested Citation

  • Sinn, Hans-Werner, 1991. "Share repurchases, the ’new’ view, and the cost of capital," Munich Reprints in Economics 19844, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenar:19844
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    Cited by:

    1. Södersten, Jan & Lindhe, Tobias, 2009. "Dividend taxation, share repurchases and the equity trap," Working Paper Series 2009:7, Uppsala University, Department of Economics.
    2. McGee, M. Kevin, 1998. "Capital Gains Taxation and New Firm Investment," National Tax Journal, National Tax Association;National Tax Journal, vol. 51(4), pages 653-673, December.
    3. McGee, M. Kevin, 1998. "Capital Gains Taxation and New Firm Investment," National Tax Journal, National Tax Association, vol. 51(n. 4), pages 653-73, December.
    4. Machiel Mulder & Arie ten Cate & Ali Aouragh & Joeri Gorter, 2004. "Gas exploration and production at the Dutch continental shelf: an assessment of the 'Depreciation at Will'," CPB Document 66, CPB Netherlands Bureau for Economic Policy Analysis.
    5. Machiel Mulder & Arie ten Cate & Ali Aouragh & Joeri Gorter, 2004. "Gas exploration and production at the Dutch continental shelf: an assessment of the 'Depreciation at Will'," CPB Document 66.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    6. Hovick Shanazarian, 2006. "Corporate Financial Dynamics: A Pecking-Order Approach," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 61(4), pages 516-534, February.
    7. Dickescheid, Thomas, 2002. "Steuerwettbewerb und Direktinvestitionen," Beiträge zur Finanzwissenschaft, Mohr Siebeck, Tübingen, edition 1, volume 16, number urn:isbn:9783161477348, May.

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