Introduction, 108. — I. The three approaches and the issues facing them, 109. — II. Similar objectives will require different policies, 114. — III. Contrast between development strategy and benefit-cost analysis, 117. — IV. Conclusion, 119.

Journal Article British Taxation: Imperial and Local Get access Joseph King Joseph King London Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 14, Issue 2, February 1900, Pages 277–284, https://doi.org/10.2307/1883772 Published: 01 February 1900

The way in which taxation affects corporate financial policy, and the level of investment through the structure of the cost of capital, is still a bone of contention. Various specifications of the cost of capital have been used in econometric models (for example, Jorgenson [3]) although in a recent theoretical paper Stiglitz [10] has claimed that, ignoring uncertainty, the cost of capital is simply the rate of interest.3 In this paper we shall analyse the effect of personal and corporate taxation on both the firm's choice of financial policy and its investment decision. We shall see that the latter is influenced by the former because the cost of capital depends upon the optimal financial policy. The results have implications for the specification of the neoclassical investment model which has come to play such an important part in the econometric study of investment behaviour, because the cost of capital is a good deal more complicated than most of this work allows for. Another problem which will be examined is how expectations of future changes in tax rates affect the firm's policy. In recent years governments have often announced tax changes in advance, and increasing attention is being paid to the use of announcements of future tax changes as a policy tool in its own right. These announcement effects can have a significant impact on investment behaviour. To make it easier to see the role of taxation we shall assume a world of perfect certainty. There are three justifications for this neglect of uncertainty. First, when tax changes are announced in advance, expectations that these changes will take place are held with a very high degree of certainty. Secondly, this assumption makes our results directly comparable with those of the neoclassical investment model. Finally, in a world of certainty we know that the firm will, if it is acting in the shareholders' interests, maximize the market value of the stock. But in a world of uncertainty which does not have a complete set of Arrow-Debreu markets it is not clear just what the firm should be trying to maximize. This is because shareholders have different subjective beliefs about what the best policy is, and there are no contingent commodity markets for them to hedge on. If one shareholder believes that the firm would make enormous profits by drilling for oil in the North Sea and nobody else believes that this would be successful, then for this shareholder the optimal policy is to drill even though the market value of the firm's stock would slump in the short run.4 Section 2 discusses a model of the valuation of the company and the way in which this is influenced by taxation. This brings out the interaction between the systems of personal and corporate taxation. In Section 3 we analyse the firm's optimal financial policy where it has a choice between financing investment by using retentions, borrowing, or

Journal Article Corporate Taxation and Dividend Behaviour: a further Comment Get access M. A. King M. A. King University of Cambridge and Harvard University Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 39, Issue 2, April 1972, Pages 231–234, https://doi.org/10.2307/2296875 Published: 01 April 1972

Journal Article Corporate Taxation and Dividend Behaviour—A Comment Get access M. A. King M. A. King University of Cambridge Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 38, Issue 3, July 1971, Pages 377–380, https://doi.org/10.2307/2296390 Published: 01 July 1971

I. Introductory. Method and purpose of this paper; Mitchell's figures subjected to more refined methods, 656. — II. Comparison of wholesale and retail prices, 658; lag of retail prices not clearly established, 659. — Producers' goods and consumers' goods; examination of annual, quarterly and monthly data, 660. — III. Raw materials, partly manufactured and finished goods move concurrently, 663. — Influence of raw materials eliminated, 664. — Dissimilar price fluctuations of producers' and consumers' goods, 665. — IV. Organic and inorganic goods; Sombart's theory tested, 666. — V. Wages in England and United States; closer relation between wages and wholesale prices in the former, 668. — VI. Summary and conclusions. Mitchell confirmed in part only, 671. — Annual figures not necessarily homogeneous; quarterly figures suggested, 673.

Journal Article Does Conservation Involve Cost? Get access Willford I. King Willford I. King University of Wisconsin Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 30, Issue 3, May 1916, Pages 595–600, https://doi.org/10.2307/1885242 Published: 01 May 1916

The check-off system now in general use by the United Mine Workers, 730. — Why the operators have granted it: a precedent in the existing check-off for supplies, and in the presence of the check-weigh-man, 731. — History of the check-off system for union dues, 734. — Its main features, 735. — The unions' "card day" done away with, 737. — Effect of the check-off in strengthening the union, 738. — It acts to bring about virtually, tho not formally, the closed shop, 739.

The purpose of this paper is to investigate the impact of legal penalties on audit quality under different legal regimes. We investigate whether audit quality is affected differentially due to the complexity inherent in legal regimes and the frequency of imposing legal penalties. Economic theory predicts that players adopt equilibrium strategies that reflect the expectation that a penalty will be incurred, but the actual occurrences of penalties, if consistent with this expectation, should not prompt an individual to modify his or her strategy. However, learning theory suggests that players' choices will be repeated in the future based on outcomes. We found that penalties triggered both increases and decreases in effort, and seemed to introduce a “shock” that increased the variability of effort. We also observed a “funnel” effect — that is. greater changes in effort closer to the imposition of penalties, and smaller changes as more periods go by without a penalty.