Abstract:Corporate finance management rules are written under the assumption that financing costs are fully deductible from taxable income. If this assumption is relaxed, such rules need to be revised. We review traditional management tools and propose a new set of guidelines for financial management. The tax reform introduced in Italy, which creates a partial tax deduction for financing costs, offers a case study to measure the impact of such rules on a firm's profitability. The general wisdom among academics and prac… Show more
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