The value of dividend imputation tax credits in Australia

A dividend imputation tax system provides shareholders with a credit (for corporate tax paid) that can be used to offset personal tax on dividend income. This paper shows how to infer the value of imputation tax credits from the prices of derivative securities that are unique to Australian retail markets. We also test whether a tax law amendment that was designed to prevent the trading of imputation credits affected their economic value. Before the amendment, tax credits were worth up to 50% of face value in large, high-yielding companies, but Subsequently it is difficult to detect any value at all. (C) 2003 Elsevier B.V. All rights reserved.

Relationship between franking credits and the market risk premium

In a dividend imputation tax system, equity investors have three potential sources of return: dividends, capital gains and franking (tax) credits. However, the standard procedures for estimating the market risk premium (MRP) for use in the capital asset pricing model, ignore the value of franking credits. Officer (1994) notes that if franking credits do affect the corporate cost of capital, their value must be added to the standard estimates of MRP. In the present paper, we explicitly derive the relationship between the value of franking credits (gamma) and the MRP. We show that the standard parameter estimates that have been adopted in practice (especially by Australian regulators) violate this deterministic mathematical relationship. We also show how information on dividend yields and effective tax rates bounds the values that can be reasonably used for gamma and the MRP. We make recommendations for how estimates of the MRP should be adjusted to reflect the value of franking credits in an internally consistent manner.

Factors influencing organisational silence

Organisadonal silence is a recendy introduced area of business research that seeks to address why employees fail to express ideas, informadon and opinions that can effecdvely improve organisadonal effecdveness. In making a start to understand silence, the majority of frameworks have suggested that employees withhold valuable input from management because they believe that it is too personally cosdy to speak up, and/or management are unMkely to take acdon about their ideas or concerns. Because today's workforce are largely required to work in groups or teams, one of the primary aims of this paper is to provide a deeper understanding of this phenomenon by focusing on group process factors that are likely to drive silence. Research that consider the group perspecdve indicate that one's ingroup posidon (i,e,, pro to typicality), and the accumuladon of idiosyncrasy credits (i,e,, leeway to offer innovadve ideas) are likely to play a role in whether (or not) people speak up. For example, those on the periphery of the group or less prototypical group members may need to conform strenuously to group norms in order to improve their ingroup posidon. Similarly, those who have accrued few idiosyncrasy credits may need to conform to group expectadons in order to accumulate sufficient "resources" to deviate from group norms, and be taken seriously by other group members. Thus, the conceptual framework proposed is underpinned by the social idendty perspecdve as well as the nodon of idiosyncrasy credits.

Technical and economic factors in applying the enhanced coalbed methane recovery process

Geological sequestration of CO2 is a technically feasible and potentially economic option for significantly and safely reducing greenhouse gas emissions, with CO2 injection already practiced in Canada and the USA to enhance crude oil production. The Enhanced Coalbed Methane (ECBM) process is seen as the next most economical sequestration options. The authors estimate an incremental methane recovery factor from 20% to 50%, depending on coal rank and seam depth. Others have estimated the potential to increase worldwide CBM production, utilising ECBM, by 18 Trillion cubic meters, while simultaneously sequestering 345 Giga tonnes of CO2. This paper presents technical and economic factors to consider for developing a commercial ECBM project. Technical factors include: geostructural and hydrogeological issues, geochemical reactions, stressed and competitive sorption, counter-diffusion, effective and relative 4-D coal permeability and methane recovery levels. Key economic factors are injectant acquisition price, sale price of methane and the level of carbon credits.