earticle

영어

An issue related to the firm financial decision is the proper criterion for new investment. Tobin (1969) has argued that firm will have an incentive to invest when the market value of the firm is greater than the reproduction cost of the capital. This implies that . Personal income taxes affect the after-tax return to equity financing. Two taxes are relevant, namely the dividend income tax, the capital gain tax. Under personal income taxes, Auerbach (1979) and Armitage (2005) has suggested that, even though the market value of the firm is less than the reproduction cost of the capital, that is , firm has an incentive to invest for new investment if the investment source is retained earnings. They argued that the cost of equity is less if the investment source is retained earnings than if the source is new issues assuming that the dividend income is more than the capital gain tax. In this paper, under a world of certainty, we explore once more the determination of firm equity policy and investment on the basis of Auerbach (1979) and Armitage (2005). For this purpose, first, we try to derive the cost of equity for new issues and the cost of equity for retained earnings using the constant growth dividend discount model on the basis of Auerbach (1983). Using this model, given that the proportion of profits is retained, we derive the cost of equity for new issues before personal tax, . Also, the cost of equity for retained earnings before personal tax, is derived by letting . From this, we find the cost of equity is affected by the capital gain tax rate but not the dividend income tax. Second, using the cost of capital for retained earnings before personal tax with no arbitrage condition, we derive the Auerbach’s which is, . The fact that the Auerbach’s is less than 1 means that the market value of the firm is less than the replacement value of its assets. Also, if , there will be no retention. Shareholder wealth is greater if all profits is paid as dividend. If , investment from retention is preferred compared with paying out dividend. If , both investment from retention and investment from new issues are worthwhile. Third, we try to link this cost of equity to ratio. That is, a change in ratio implies a change in the cost of equity; if is going to fall next period, there will be a capital loss on shares, and the new cost of equity exceeds the original cost of capital for retained earnings under equilibrium condition. In addition, with , we derive the cost of capital for new issues in single period, , which is the same as Auerbach (1983), for proving that this cost of equity is also exceeds the cost of capital for retained earnings. Finally, we analyse how the market value may fall below reproduction cost of capital in a economy. By this analysis, we conclude that if , firm will not issue new shares to finance investment. But, they will reinvest all of their retained earnings in new capital.

한국어

기업의 재무정책과 관련된 이슈는 새로운 투자에 대한 합당한 기준을 설정하는 것이다. 토빈(1969)은 주식의 시장가치가 실물자본의 재생산비용보다 클 경우만이 기업은 투자할 유인을 가진다고 주장하였으며 이는 토빈의 q가 1보다 큼을 의미한다. 그러나 Auerbach(1979)와 Armitage(2005)는 개인소득세가 존재하여 배당 소득세가 자본이득세보다 크고 투자자금의 원천이 유보이익이라면 토빈의 q가 1보다 작다고 하더라도 투자할 유인이 생긴다고 주장하였다. 본 연구는 확실성하에서 개인소득세가 존재할 경우에 기업의 재무정책과 관련된 투자결정의 기준으로 Auerbach(1979)와 Armitage(2005)에 의한 Auerbach의 q의 산출과정에 대하여 살펴 보고 이들의 연구를 보다 재무론적인 관점에서 심도있게 분석하고자 하였다. 이를 위하여 먼저, Auerbach (1983)에 기초한 항상성장 배당평가 모형에 의거하여 신주발행시의 자본비용과 유보이익의 자본비용을 유도 하였다. 그리고 만약 q가 하락한다면 자본비용이 상승함을 증명함으로서 기업의 자본비용과 Auerbach의 q와는 서로 음(-)의 관련성이 있음을 보이고자 하였다. 다음으로, 개인소득세가 존재할 경우에 새로운 투자에 대한 유보이익의 투자기준은 이 됨을 보이고 이를 토대로 기업의 재무정책에 대한 투자결정의 기준을 마련하고자 하였다.