Economics

This paper tests for the importance of cash flow on investment in fixed capital and R&D using firm-level panel data in two countries between 1985 and 1994. For German firms, cash flow is not informative in simple econometric models of fixed investment or R&D. In identical specifications for...

This paper uses Monte Carlo simulations to investigate the impact of nonstationarity, parameter heterogeneity and cross-section dependence on estimation and inference in macro panel data. We compare the performance of standard panel estimators with that of our own two-step method (the AMG) and...

This paper uses Monte Carlo simulations to investigate the impact of nonstationarity, parameter heterogeneity and cross-section dependence on estimation and inference in macro panel data. We compare the performance of standard panel estimators with that of our own two-step method (the AMG) and...

This paper considers the relationship between two general neutral business tax structures, which we label the ‘firm tax’ and the ‘shareholder tax’. The well-known R-based and S-based cash flow taxes, analysed by Meade (1978), are special cases of these two taxes. We demonstrate the...

We use panel data for 1,218 UK industrial and commercial companies between 1970 and 1990 to investigate whether dividends are affected by taxes. Cross-section variation in the tax cost of paying dividends results from surplus advance corporation tax (ACT) affecting some firms during this period....

This paper extends the results of Boadway and Bruce (Journal of Public Economics, 1984, 24, 231–239) and Fane (Journal of Public Economics, 1987, 33, 95–105) to describe a tax on business profits which is neutral with respect to investment and wind-up decisions, and default outcomes, under...

A study investigated the effect of the higher tax cost of paying dividends for firms in the surplus advance corporation tax (ACT) position. If taxes do have a significant influence on dividend choices, then it would not be unreasonable to expect a firm moving into a surplus ACT position to...