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Keywords:leasing 

Working Paper
Tax Exhaustion, Firm Investment, and Leasing: A Test of the Q Model of Investment

Standard models of investment usually incorporate various tax factors but often overlook "tax exhaustion," the case when a firm has negative taxable income and cannot claim immediately its tax deductions or credits. However, tax exhausted firms face a higher cost of capital, and evidence shows that tax exhaustion is not uncommon. This paper incorporates tax exhaustion into a "Q" model of investment to see whether its performance is improved. In addition, leased investment is fully incorporated into the model, in part because tax exhaustion creates incentives to lease investment products and ...
Finance and Economics Discussion Series , Paper 1996-31

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