A Simple Accounting-based Valuation Model for the Debt Tax Shield

This paper describes a simple way to integrate the debt tax shield into an accounting-based valuation model. The market value of equity is determined by forecasting residual operating income, which is calculated by charging operating income for the operating assets at a required return that accounts for the tax benefit that comes from borrowing to raise cash for the operations. The model assumes that the firm maintains a deterministic financial leverage ratio, which tends to converge quickly to typical steady-state levels over time. From a practical point of view, this characteristic is of particular help, because it allows a continuing value calculation at the end of a short forecast period.

Why Do We Think Practice Research is a Good Idea? Comments and Musings Inspired by the Salisbury Statement

In this paper I raise some questions about current understandings of practice research and whether they are worth pursuing. In particular, the notion of a gap between practice and research is examined in terms of how it constricts thinking about this issue. I also attempt to explicate some of the less examined assumptions associated with practice research. Finally, I suggest that we embrace multiplicity, not by trying to accommodate all views under the practice research umbrella, but by accepting that there will be many versions of practice research that will have differential appeal.