Scope and Outline of the Book

Abstract

This book aims to include the effects of a progressive personal tax into the deterministic dynamic theory of the firm. To that end we investigate the impact of a progressive personal tax on the optimal dividend, financing and investment policy of a shareholder controlled value maximizing firm. More specific, the principal aim is the justification of the thesis that during each stage of their evolution firms will be controlled by investors in different tax brackets. To that end we develop a dynamic equilibrium valuation and portfolio theory under certainty, that considers

• the market value of an arbitrary firm such that no excess demand for or supply of shares exists

• the portfolio selection of differently taxed investors

• the succession of differently taxed investors, who possess the shares of any value maximizing firm, in the course of time

• the optimal resulting policy string and corresponding evolution of a firm in the course of time.