Share repurchases, the ’new’ view, and the cost of capital

Sinn, Hans-Werner (1991): Share repurchases, the ’new’ view, and the cost of capital. In: Economics Letters, Vol. 36, No. 2: pp. 187-190

Abstract

This paper counters the view that the possibility of share repurchases invalidates the predictions of the ’new’ (or ’trapped equity’) view of corporate taxation. It is shown that the ’new’ view’s basic cost of capital expression which distinguishes it from the ’old’ view remains valid regardless of the proportions in which corporate distributions of earnings split into share repurchases and ordinary dividend payments.

• Item Type: Journal article
• Faculties: Economics; Economics > Chairs > Chair for Public Economics
• Subjects: 300 Social sciences > 330 Economics
• Language: English