scholarly journals Does executive compensation reflect equity risk incentives and corporate tax avoidance? A Japanese perspective

2014 ◽  
Vol 11 (2) ◽  
pp. 60-71
Author(s):  
Hiroshi Ohnuma
Keyword(s):  
Executive Compensation ◽  
Net Present Value ◽  
Multivariate Analyses ◽  
Risk Measures ◽  
Estimation Method ◽  
Tax Avoidance ◽  
Present Value ◽  
Corporate Tax ◽  
Equity Risk ◽  
Japanese Perspective

This study examines corporate tax avoidance as a determinant of executive compensation on the basis of equity risk incentives. Previous research shows that equity risk incentives motivate managers to make more risky, but positive net present value—investment decisions. Through correlation analyses, this study demonstrates that the tax risk measures adopted in this study are negatively associated with both the adoption of stock options and tax aggressive measures. Through multivariate analyses, this study demonstrates that executive compensations are significantly associated with our measures of tax risk positions despite the inclusion of several control variables. Moreover, this study finds consistent evidence that executive equity risk incentives are significantly associated with aggressive tax positions, regardless of the estimation method and the strength of the corporate governance function, and across several tax risk measures.

scholarly journals THE DEVELOPMENT OF THE RISK MANAGEMENT MECHANISM FOR INNOVATION PROJECT

2018 ◽  
Vol 3 ◽  
pp. 12-20
Author(s):  
Anatoliy Shakhov ◽  
Varvara Piterska
Keyword(s):  
Risk Management ◽  
High Probability ◽  
Net Present Value ◽  
Risk Measures ◽  
Innovative Activity ◽  
Financial Risks ◽  
Present Value ◽  
Management Mechanism ◽  
Management Measures ◽  
Innovation Project

It is established that the high probability of emergence of risk situations in the innovation project, requires the implementation of risk management measures. It is noted that there is currently no mechanism for distributing of financial risks between the customer and the executor of the innovation project, that is largely negatively reflected in the desire to invest own funds in innovation. The methodological bases of risk management of innovative activity of the project-oriented organization are offered in the article. With the proposed approach, it is possible to estimate in advance how much the proposed risk management measures can reduce the risk of an innovation project and how this activity will affect on the project's effectiveness in deciding whether to continue or stop the innovation project research. On the basis of the existing characteristics of the risk measures of the innovation project, it can be concluded that the best indicator of the effectiveness of a certain stage of the innovation project by the results of simulation is net present value of the project. It is better to use the probability of receiving an ineffective result of an innovation project at an appropriate stage for assessing of the risk of the innovation project and the decision to continue or stop the innovation project at a certain stage.

scholarly journals The Non-Linear Relationship Between CEO Compensation Incentives And Corporate Tax Avoidance

2017 ◽  
Vol 33 (3) ◽  
pp. 439-450 ◽  
Author(s):  
Seungmin Chee ◽  
Wooseok Choi ◽  
Jae Eun Shin
Keyword(s):  
Executive Compensation ◽  
Linear Relationship ◽  
Ceo Compensation ◽  
Tax Avoidance ◽  
Corporate Tax ◽  
Non Linear ◽  
Prior Literature ◽  
Low Levels ◽  
Risk Reducing ◽  
Compensation Incentives

This study examines the effect of CEO compensation incentives on corporate tax avoidance. Unlike prior literature that assumes a monotonic relation between executive compensation incentives and tax avoidance, we find a non-linear relation between the two. Specifically, we find that CEO compensation incentives exhibit a positive relation with corporate tax avoidance at low levels of compensation incentives, whereas they show a negative relation at high levels of compensation incentives. We further find that the non-linear relationship between CEO compensation incentives and corporate tax avoidance does not exist for the subsample of S&P500 firms. Collectively, we provide evidence of the two counter effective forces, namely, - the incentive alignment effect and the risk-reducing effect, - that help explain the effect of CEO compensation incentives on tax avoidance.

scholarly journals Role of debt-to-equity ratio in project investment valuation, assessing risk and return in capital markets

2021 ◽  
Vol 7 (1) ◽  
Author(s):  
Vasishta Bhargava Nukala ◽  
S. S. Prasada Rao
Keyword(s):  
Stock Price ◽  
Net Present Value ◽  
Cost Of Capital ◽  
Cash Flows ◽  
Equity Capital ◽  
Present Value ◽  
Gross Margin ◽  
Potential Growth ◽  
Equity Risk ◽  
Equity Ratio

AbstractIn this paper, a case study was performed with an aim to analyze the asset returns for two different companies and the risk and returns from capital projects using standard capital asset pricing method. To demonstrate how the present values of future cash flows are influenced by discount rates when the debt-to-equity capital structure ratio is varied between 0 and 2.5 debt-to-equity. The breakeven sensitivity was also conducted in relation to different gross margin ratios of company. It was found that high value of debt-to-equity ratio yielded a flatter net present value with increase in gross margins. Capital appraisal techniques were applied to illustrate the project returns and annual cash flows and its relationship with change in cost of capital. Analysis showed that when average cost of capital is increased beyond threshold value, the net present value from the firm’s project investments reduced significantly. A covariance analysis was performed to determine individual returns from two stocks traded in BSE Sensex and S&P 500 indices using the beta values. Comparing the individual and total returns of two stocks revealed that returns not only increased with increasing beta values–but also varied with earnings potential, growth rate of firm, dividend payout ratios and trading stock price. The standard deviation on portfolio of two stocks has been computed for varying asset weight ratios. It has been found that positive correlation between two stocks increased equity risk when weight ratios are not balanced in portfolio, while a negative correlation reduced equity risk.

scholarly journals An Economic Evaluation of the Loye Quarry of Atiwa Quarries Limited

2017 ◽  
Vol 17 (1) ◽  
pp. 43-53
Author(s):  
D. Mireku-Gyimah ◽  
N. K. Owusu Ansah
Keyword(s):  
Sensitivity Analysis ◽  
Risk Analysis ◽  
Net Present Value ◽  
Operating Cost ◽  
Estimation Method ◽  
Rate Of Return ◽  
Sensitivity Analyses ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Internal Rate

Atiwa Quarries Limited (AQL) is one of the large operating granite quarries in the Central Region of Ghana. AQL’s current production of 24 000 m3 of aggregates per month cannot meet current demand let alone support a new contract to supply 25 000 m3 of aggregates per month for a major road infrastructure project. Fortunately, AQL has another granite concession at Loye, about 3 km from the first concession, with estimated granite reserves of 6 286 208 m3, which can be developed as a new quarry to meet the demand of the new contract. This will require capital to build infrastructure, purchase equipment, recruit labour and provide working capital. The objective of this paper is to evaluate the economic viability of the new quarry, considering it as a stand-alone project. The yearly revenue was estimated based on projected production of 25 000 m3/month and average price of US$ 15.63/m3.  Capital and operating costs were estimated using detailed cost estimation method based on quotations from equipment suppliers and operational unit costs of AQL. It turns out that AQL can generate yearly gross revenue of US 4.69 million but requires total capital of US$ 3.67 million; the yearly operating cost is US$ 1.72 million.  Cash flow and sensitivity analyses using Net Present Value (NPV) and Internal Rate of Return (IRR) as criteria, and risk analysis using Monte Carlo simulation method were carried out. The economic analysis indicates that based on AQL’s preferred capital structure of 80% equity and 20% loan, the NPV is $ 5.17 million and the IRR is 53.01%, showing the new quarry is profitable; the sensitivity analysis indicates that the project can withstand up to 40% drop in revenue, or over 60% increase in capital or operating cost. The risk profile indicates a probability of success of 98.2%. The study therefore recommends that AQL invests in the new quarry as it is economically viable. Keywords: Granite Quarry, Net Present Value, Internal Rate of Return, Sensitivity Analysis, Risk Analysis

scholarly journals The Influence of Executive Compensation and Executive Shares Ownership towards Corporate Tax Avoidance

2021 ◽  
Vol 5 (1) ◽  
pp. 49
Author(s):  
Melisa Rahardja Tandiono ◽  
Setyarini Santosa
Keyword(s):  
Executive Compensation ◽  
Annual Report ◽  
Stock Exchange ◽  
Tax Avoidance ◽  
Building Construction ◽  
Annual Reports ◽  
Company Performance ◽  
Negative Coefficient ◽  
Corporate Tax ◽  
Construction Company

<p>This study aims to examine the influence of executive compensation and executive shares ownership towards tax avoidance. By knowing the influence of executive compensation and executive shares ownership towards tax avoidance, it could be an input for better regulations relates to tax avoidance. This study used the annual report of property, real estate, and building construction company listed on Indonesia Stock Exchange during 2014-2018. This study uses purposive sampling to determine the samples. There are 14 companies used in this research, in total there are 70 annual reports as samples used in this research. The control variables used in this research are company performance proxied using return on asset and company size proxied using total asset. The method used in this research is multiple linear regression. This study found that executive compensation has significant influence with negative coefficient on tax avoidance and executive shares ownership does not influence tax avoidance.</p>

scholarly journals A FRACTAL ANALYSIS FOR NET PRESENT VALUE OF MULTI-STAGE HYDRAULIC FRACTURED HORIZONTAL WELL

Fractals ◽  
2017 ◽  
Vol 25 (04) ◽  
pp. 1740011 ◽  
Author(s):  
HONG-LIN LU ◽  
JI-JUN ZHANG ◽  
XIAO-HUA TAN ◽  
XIAO-PING LI ◽  
JIA-HUI ZHAO
Keyword(s):  
Net Present Value ◽  
Estimation Method ◽  
Fractal Dimensions ◽  
Assessment Method ◽  
Tight Gas ◽  
Present Value ◽  
Apparent Permeability ◽  
Permeability Model ◽  
Multi Stage ◽  
Tight Gas Reservoir

Because of the low permeability, multi-stage hydraulic fractured horizontal wells (MHFHWs) occupy a dominant position among production wells in tight gas reservoir. However, net present value (NPV) estimation method for MHFHW in tight gas reservoirs often ignores the effect of heterogeneity in microscopic pore structure. Apart from that, a new fractal model is presented for NPV of MHFHW, based on the fractal expressions of formation parameters. First, with the aid of apparent permeability model, a pseudo pressure expression considering both reservoir fractal features and slippage effect is derived, contributing to establish the productivity model. Secondly, economic assessment method is built based on the fractal productivity model, in order to obtain the NPV of MHFHW. Thirdly, the type curves are illustrated and the influences of different fractal parameters are discussed. The pore fractal dimensions [Formula: see text] and the capillary tortuosity fractal dimensions [Formula: see text] have significant effects on the NPV of an MHFHW. Finally, the proposed model in this paper provides a new methodology for analyzing and predicting the NPV of an MHFHW and may be conducive to a better understanding of the optimal design of MHFHW.

ANALISIS KELAYAKAN FINANSIAL INDUSTRI PENGOLAHAN KECAP ANEKA GUNA DI KOTA LANGSA

2017 ◽  
Vol 2 (1) ◽  
pp. 21-30
Author(s):  
Muhammad Jamil ◽  
Januari Frizki Bella
Keyword(s):  
Net Present Value ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Internal Rate

Adapun tujuan dari Penelitian ini adalah untuk mengetahui kelayakan usaha industri pengolahan kecap Aneka Guna apabila dilihat dari segi kelayakan finansial. Penelitian ini menggunakan metode studi kasus. Lokasi penelitian yaitu di Kota Langsa dengan pertimbangan bahwa lokasi tersebut merupakan daerah yang terdapat industri pengolahan kecap asin dan mudah di jangkau oleh penulis. Waktu penelitian dilaksanakan pada Bulan Juni - Oktober 2014. Tenaga kerja yang digunakan berjumlah 27 orang, 20 tenaga kerja pria dan 7 orang tenaga kerja wanita. Jumlah penggunaan tenaga kerja selama 5 tahun sebesar 3759 HKP. Total biaya produksi yang dikeluarkan oleh pengusaha dalam usaha pembuatan kecap didaerah penelitian selama 5 tahun adalah Rp. 2.076.988.000,-. Pendapatan kotor yang diperoleh pengusaha sebesar Rp. 8.199.690.000,- dan pendapan bersih yang diperoleh sebesar Rp. 6.122.702.000,-                 Kota Langsa hanya memiliki 1 pengusaha pengolahan kecap asin dan dijadikan sebagai pengusaha sampel yaitu usaha industri pengolahan kecap asin Aneka Guna. Hasil perhitungan di peroleh Net Present Value (NPV) sebesar Rp. 263.281.290 (lebih besar dari nol), sedangkan Internal Rate of Return (IRR) sebesar 84% lebih besar dari tingkat bunga yang berlaku (D.F. = 18%), sedangkan Net B/C Ratio sebesar 3,27 (lebih dari pada 1) dan Pay Back Priod (PBP) 1 Tahun 6 Bulan (lebih kecil dari umur ekonomis).  

UNIFICATION OF STANDS SELECTION FOR FINAL FELLING IN STRATEGIC AND TACTICAL PLANNING

2015 ◽  
Author(s):  
Ainārs GRĪNVALDS
Keyword(s):  
Strategic Planning ◽  
Net Present Value ◽  
Strategic Plan ◽  
Regression Function ◽  
Tactical Planning ◽  
Present Value ◽  
Black Alder ◽  
Value Maximization ◽  
Annual Changes ◽  
Selection For

The stand selection for cutting in tactical planning should be done according to the same principles like in strategic planning – to maximize net present value. The simple way of how to transfer the net present value maximization principle from strategic planning to tactical planning was created in Sweden. The method is based on annual changes in the net present value by postponing final felling. Forest inventory data and forestry modelling system was used for calculation of changes in net present value for pine, spruce, birch, aspen and black alder stands. And changes in net present value were described by regression function with factors from stand parameters. The regression function allows calculating annual changes in net present value for each stand. And stands with higher decrease in net present value have higher cutting priority. Stands selected for the final felling in strategic plan were compared with the stands selected in tactical plan with two methods, first, by using annual changes in the net present value, second, by traditional planning principles. Stands selected by annual changes in the net present value were similar to stands that were selected for cutting in strategic plan, but stands selected by traditional planning principles – not.

EVALUASI TERHADAP PENGELOLAAN SAMPAH DALAM MENINGKATKAN PELAYANAN ASET DI KOTA PEMATANGSIANTAR

2017 ◽  
Vol 13 (3) ◽  
pp. 240
Author(s):  
Novdin M Sianturi
Keyword(s):  
Net Present Value ◽  
Payback Period ◽  
Rate Of Return ◽  
Cost Ratio ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Benefit Cost Ratio ◽  
Internal Rate ◽  
Benefit Cost

Abstrak: Pengelolaan sampah di Kota Pematangsiantar masih bertumpu pada pendekatan akhir (kumpul-angkut-buang), dengan tingkat pelayanan yang rendah, sehingga untuk meningkatkan pelayanan sampah, perlu dilakukan pemilahan di tempat penampungan sementara (TPS). Penelitian ini bertujuan untuk mengkaji sistem pengelolaan sampah dengan melakukan pemilihan di TPS dapat meningkatkan pelayanan aset persampahan sampai tahun  2015 secara teknis operasional dan dari aspek keuangan. Analisa teknis operasional aset pengelolaan sampah mulai dari pewadahan, pengumpulan dan pengangkutan sedangkan analisa keuangan dan analisa kelayakan menggunakan Net Present Value, Internal Rate of Return, Benefit/Cost Ratio, dan Payback Period. Dari hasil analisa tersebut diperoleh suatu sistem pengelolaan sampah dengan pemilihan di TPS berdasarkan zona pelayanan dengan skala prioritas secara bertahap daritahun 2013-2017, dapat meningkatkan cakupan pelayanan sampah eksisting rata-rata 6,69 %, cakupan pelayanan TPS eksisting rata-rata 8,29 %, dan cakupan pelayanan truk pengangkut sampah eksisting rata-rata 12,03 %. Investasinya layak, diperoleh Net Cashflow pada tahun 2020 sebesar Rp 1.720.242.284,-, NPV suku bunga 15 % bernilai positif, IRR > MARR 15 %,  B/C Ratio > 1, dan PP 4,7 tahun, lebih pendek dari periode investasi 10 tahun. Dari Metode penelitian ini maka pengumpulan data, observasi lapangan dan pengukuran contoh timbulan sampah dengan sampel 4 TPS perumahan yang terlayani pengangkutan.

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