Investment Valuation with Tax-optimized Financing Decisions and a Tax-optimized Default Alternative

In this paper we evaluate an indivisible investment project that is carried out in a corporation under very simple premises. In particular, we discuss a one-period model with certainty, the pure domestic case and proportional tax rates. Surprisingly, the decision problem turns out to be rather complex if one has to make allowance for different taxation of the corporation and its owner. Altogether there are more than 10 cases that have to be distinguished if the firm's managers want to make a correct decision, depending on the relation of personal and corporate tax rates.

Thin Capitalization Rules and Entrepreneurial Capital Structure Decisions

Tax planners often choose debt over equity financing. As this has led to increased corporate debt financing, many countries have introduced thin capitalization rules to secure their tax revenues. In a general capital structure model we analyze if thin capitalization rules affect dividend and financing decisions, and whether they can partially explain why corporations receive both debt and equity capital. We model the Belgian, German and Italian rules as examples. We find that the so-called Miller equilibrium and definite financing effects depend significantly on the underlying tax system. Further, our results are useful for the treasury to decide what thin capitalization type to implement.

Genetic diversity of Swiss sheep breeds in the focus of conservation research

There is constant pressure to improve evaluation of animal genetic resources in order to prevent their erosion. Maintaining the integrity of livestock species as well as their genetic diversity is of paramount interest for long-term agricultural policies. One major use of DNA techniques in conservation is to reveal genetic diversity within and between populations. Forty-one microsatellites were analysed to assess genetic diversity in nine Swiss sheep breeds and to measure the loss of the overall diversity when one breed would become extinct. The expected heterozygosities varied from 0.65 to 0.74 and 10.8% of the total genetic diversity can be explained by the variation among breeds. Based on the proportion of shared alleles, each of the nine breeds were clearly defined in their own cluster in the neighbour-joining tree describing the relationships among the breeds. Bayesian clustering methods assign individuals to groups based on their genetic similarity and infer the number of populations. In STRUCTURE, this approach pooled the Valais Blacknose and the Valais Red. With BAPS method the two Valais sheep breeds could be separated. Caballero & Toro approach (2002) was used to calculate the loss or gain of genetic diversity when each of the breeds would be removed from the set. The changes in diversity based on between-breed variation ranged from -12.2% (Valais Blacknose) to 0% (Swiss Black Brown Mountain and Mirror Sheep); based on within-breed diversity the removal of a breed could also produce an increase in diversity (-0.6% to + 0.6%). Allelic richness ranged from 4.9 (Valais Red) to 6.7 (Brown Headed Meat sheep and Red Engadine Sheep). Breed conservation decisions cannot be limited to genetic diversity alone. In Switzerland, conservation goals are embedded in the desire to carry the cultural legacy over to future generations.