The article argues that behavioral implications should be considered in the formulation of tax law and policy in the United States. The income tax policy of the United States has many objectives including raising revenue, encouraging economic growth, stabilizing the economy, redistributing income and wealth and encouraging certain industries. Although taxation does influence human behavior, most tax laws are enacted without adequate consideration of their behavioral effects. A person on welfare cannot better himself by working unless he can get off welfare altogether. Proponents of the negative income tax, both conservatives and liberals, indicate that under a negative income tax system the individual's payments would not be reduced dollar-for-dollar as earnings rise. The households were drawn from a stratified sample of eligible households and were assigned to either an experimental or control group. An increase in income has had little impact on family stability. The power of incentives and disincentives is enormous. They may be used to safeguard or to exploit, to subsidize one interest or to destroy another, to simplify administration or to confuse it. Taxation does influence human behavior, but the important thing is to learn which provisions influence behavior in what way-- and whether the resulting behavior is that which is desired.

Most large companies develop formal or informal agreements with banks to cover anticipated seasonal or temporary cash needs and/or to provide assurance of the availability of funds against unanticipated cash requirements. We address the problem of determining the optimal limits of available funds a company should maintain under a revolving credit agreement. Typically a company will negotiate a legal commitment with a bank or group of banks for a specified period of time, usually one to three years, in which the bank agrees to extend credit up to a specified maximum amount. During the duration of the commitment, the bank must lend money to the company whenever the company wishes to borrow, provided the amount of money borrowed does not exceed the maximum amount noted in the agreement. The company must not be in default of any of the restrictive covenants of the agreement, such as working capital limits, compensating balances, limits on other indebtedness, etc. Although the agreement itself provides for intermediate-term financing, the agreement often takes the form of short-term (30-60-90 days) renewable notes.

In this paper, I provide some evidence concerning the relationship between financial information and a firm's entry into a capital market. The main assumption underlying this study is that corporations will be motivated to upgrade their financial disclosure in order to obtain scarce money capital as cheaply as possible.' To assess the relationship between disclosure and capital market entry, I selected the entry of an enterprise-investor into an international new issues market. My reason for this choice was simply that a firm would be expected to make its security issues relatively appealing during entry in order to attract support from an audience which possesses alternative outlets for their savings.2 The demand for information would appear to be even stronger in an international setting where investors are often unacquainted with the relative merits of foreign borrowers.3 The effect of