The Information Content of Investment Tax Credits

Posted: 20 Aug 2001

See all articles by Dimosthenis L. Hevas

Dimosthenis L. Hevas

Athens University of Economics and Business - Department of Accounting and Finance

Aphroditi J. Papadaki

Athens University of Economics and Business - Department of Accounting and Finance

Abstract

This study examines the association between stock prices and tax credits for new investment, which appear in the balance sheet as a tax-free reserve. A number of valuation models were developed for companies listed on the Athens Stock Exchange during the period 1990 - 1994. The empirical findings reveal that retained earnings committed to new investment, i.e. investment tax credits for future investments, are valued differently from both the remaining equity and the remaining earnings. Moreover, the empirical evidence suggests that the investment tax credits in Greece are not always viewed in a positive fashion by the stock market.

JEL Classification: D92, G12, G15, G31, H25, M41

Suggested Citation

Hevas, Dimosthenis (Dimosthenes) L. and Papadaki, Aphroditi J., The Information Content of Investment Tax Credits. Available at SSRN: https://ssrn.com/abstract=274110

Dimosthenis (Dimosthenes) L. Hevas (Contact Author)

Athens University of Economics and Business - Department of Accounting and Finance ( email )

76 Patission Street
GR-104 34 Athens
Greece

Aphroditi J. Papadaki

Athens University of Economics and Business - Department of Accounting and Finance ( email )

76 Patission Street
GR-104 34 Athens
Greece

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