Taxes play an important but underemphasized role in the valuation of a company and its projects. For example, the authors estimate that the expected tax benefits from interest deductions by all publicly traded U.S. corporations were responsible for almost $1.4 trillion of their total market...

If a company faces some form of tax progressivity-that is, its marginal tax rate increases over the firm's expected range of reported taxable income-corporate hedging can reduce the firm's expected tax liability by reducing the volatility of pre-tax income. In a study described in this article,...