After-tax Profits Research Articles

A general model for extended strategic supply chain management with emphasis on product life cycles including development and recycling

The objective of this paper is to introduce a new perspective of strategic supply chain management to strategic planning. Strategic supply chain management is the long-term part of supply chain management, where the product program and supply chain network are determined. Here the traditional supply chain network of procurement, production, distribution and sales is extended to a product life cycle by the business processes of development and recycling. A general linear mixed integer model is designed considering the business processes of a product life cycle. Goal of this approach is to optimize after-tax profit of a company and to fix the product program and the extended supply chain network. Dynamic aspects are taken into account by the application of a two-step time structure, macro and micro periods, which is well known from general lot-sizing and scheduling optimization models. The main contributions of this new perspective of strategic supply chain management are to permit investment decisions between alternative products and development projects, to compare product life cycles with their development and recycling strategies and to analyze their impact on the supply chain network.

The Costly Illusion of Regulating Unknowable Risks

Uncommon but alarming man-made toxic episodes have occasioned regulation to ensure the safety of novel and commonly used substances and foremost to control agents that may cause cancer. However, the safety or harm of novel entities has no durable record of human use, and hence is virtually unknown. Compelled to act, regulators have chosen animal tests to forecast human cancer risks. To this end, animal data are filtered through a series of preconceived assumptions that are presumed to overcome a host of human/animal differences of biology, exposure, and statistics—differences that in reality are insurmountable. Asked for authoritative opinion, the National Academy of Sciences repeatedly found this regulatory approach without factual or scientific justification and, by implication, arbitrary and irrational. On these grounds, such a regulatory process appears vulnerable to scientific, legal, and constitutional challenges. Although it cannot provide credible assurance that an agent may be safe or harmful, the process has been a prime reason for an annual regulatory burden that exceeds the combined after-tax profits of all U.S. industrial activity. It is argued here that better use of national resources would come from a rational approach based on trade-off considerations, where a substance would be regulated depending on its socio-economic utility and on scientific evidence of proved relevance to human safety.

Integration of environmental, agronomic, and economic aspects of fertilizer management

Nitrogen fertilization is a substantial source of nitrogen-containing trace gases that have both regional and global consequences. In the intensive wheat systems of Mexico, typical fertilization practices lead to extremely high fluxes of nitrous oxide (N2O) and nitric oxide (NO). In experiments, lower rates of nitrogen fertilizer, applied later in the crop cycle, reduced the loss of nitrogen without affecting yield and grain quality. Economic analyses projected this alternative practice to save 12 to 17 percent of after-tax profits. A knowledge-intensive approach to fertilizer management can substitute for higher levels of inputs, saving farmers money and reducing environmental costs.

International income shifting by US multinational corporations

This paper provides estimates of the amount of income shifted across national borders within the manufacturing operations of US multinational corporations (MNCs) in 1988. It is assumed that each MNC arranges its investments such that, after accounting for income shifting opportunities, the after-tax rate of return on a marginal investment is the same for all its affiliates, regardless of location. The income shifting is then inferred by comparing shares of after-tax profits, assets and sales of the affiliated members. It is estimated that such shifting amounted to about $8 billion (on net), which is less than 4% of the worldwide taxable income of the manufacturing MNCs.

The Political Economy of Corporate Taxation

The Political Economy of Corporate Taxation

What is the cost of increasing taxation?] (Oslo: Statistics Norway: Oekonomiske analyser no 8). [In Nowegian

Zero taxation is today the rule in the international shipping industry. The absent income tax on profits is translated into an equivalent reduction in freight rates. Countries and companies which are net purchasers of shipping services gain, while the treasuries of countries providing the equity lose. Equity investors in shipping obtain no more than the internationally required after-tax profit level. The private income distribution effect, therefore, should not give rise to political concern. By eroding the tax base, zero taxation gives rise to an economic cost by shifting taxation to other sources. The effect on resource allocation through too high volumes shipped is shown to be insignificant. In countries where profit taxation is still levied, shipowning cannot remain competitive. Forcing inherently competitive operators to close down or move to a zero tax location is likely to cause a significant economic loss. Short of ordinary taxation of shipping internationally, the second best solution may be a more consistent lifting of tax obligations.

Transfer Pricing, Double Taxation, and the Cost of Capital

The effects of double taxation are analysed when a multinational enterprise can shift profits by transfer pricing behaviour. It is shown that the well-known Hartman-Sinn neutrality result may not hold in this case. Surprisingly, an increase in the taxation of foreign dividends may lead to a lower cost of capital for the foreign subsidiary. I. Introduction In recent years there has been growing awareness that multinational firms can evade a large portion of their statutory tax burden by manipulating transfer prices in cross-border transactions.' One reason for shifting profits between jurisdictions using transfer pricing is the differences in corporate tax rates. By underpricing intra-company sales and overpricing intracompany purchases, a subsidiary located in a high tax country can increase the multinational's overall profit since the parent's gain in after-tax profit is higher than the subsidiary's net of tax loss. A second reason for setting

Causes of Japanese firms' direct investments in US manufacturing industries

A composite model is developed to investigate the determinants of new Japanese direct foreign investments in the US. The time period of study is 1976 to 1990, observing 11 types of US manufacturing industries. An autoregressive model is employed in the empirical estimation process using a set of panel data. It is found that the higher Japanese gross savings and lower after-tax industry profit rates cause a larger amount of Japanese direct investment. An expected depreciation of the real exchange rate and/or low exchange rate induced a larger amount of direct investment. Larger economies of scale at the corporate level (such as a higher R&D intensity) as well as higher non-trade barriers stimulate a larger amount of direct investment. Cultural distance did disadvantage Japanese FDI in the US.

Valuing Employee Share Options: Four Australian Case Studies

We take four case studies to illustrate three issues: how ESOs are valued; how the valuation depends on assumptions; and how US proposals to account for ESOs would affect a company's financial profile. We adopt the Black‐Scholes options model to value ESOs issued by Brambles Industries, Coles Myer, Tabcorp Holdings and Westpac Banking Corporation. Under the FASB's proposal, after‐tax profit is lower and shareholders' funds and assets are higher beginning with the grant date. At the end of the amortisation period, assets and shareholders' funds would be the same as under current practice, but the fair value of the ESOs on their grant date would have been transferred from unappropriated profits to issued capital.

ISGP-II for multiobjective optimization with imprecise objective coefficients

In this study, we consider a multiple objective decision-making problem whose objectives involve imprecise/fuzzy coefficients. Triangular possibility distributions are used to quantify the imprecise nature. By using the concept of the most possible α-efficient solution, we propose a computationally efficient auxiliary model to resolve imprecise objectives. Our model effectively uses all the information provided by the possibility distributions. Furthermore, we develop an interactive decision support system ISGP-II to solve a (crisp) multiple objective decision-making problem. ISGP-II provides a process of psychological convergence for the decision maker, whereby (s)he learns to recognize good solutions and their importance in the system, and to design an optimal system, instead of optimizing a given system. For illustrating the proposed approach, we solve a practical bank balance sheet problem with three objectives: maximizing after-tax profit, minimizing capital-adequacy ratio and minimizing risk-asset ratio, where after-tax profit (or cost of fund), relative need for capital, and relative risk of assets are imprecise under dynamic economic conditions and decision makers' subjective judgments.

Supplement: Financial Management of Workers' Education (1982)

Abstract To support the revitalization and development of workers' education, with the consent of the National Management Committee on Workers' Education and the All-China Federation of Trade Unions, Section 3 on sources of funds in the document issued by this Ministry in 1981, Caiqizi, no. 212, "Provisional Regulations Concerning Financial Management of Workers' Education and the Scope of Its Expenditures," is amended to read as follows and is to be enforced on August 1, 1982: 1. Workers' education fund in enterprises. Enterprises and companies (including enterprises in charge of capital construction) practicing unified accounting may control this fund within the ceiling of 1.5 percent of the total salary. This may be included directly in the production cost (or circulation fees), reimbursed as actually spent, with no portion retained for enterprise endowment. If the 1.5 percent of the total salary falls short of demand, money may be drawn from the enterprise endowment, the retained portion of profit, the surplus of the block grant allotment, or after-tax profits and spent on workers' education.

Decision: Reform in Adult Education (1987)

Abstract Promoting adult education is a human resources development with short cycles and quick effects and that calls for a certain amount of funds and investment. Starting this year, adult education will be included in the state budget for revenues and expenditures as an additional item. When making arrangement for education expenditures, local financial departments should also incorporate funds needed for adult education in their budgets and allow the funds to increase as the economy moves forward and regular revenues grow. Enterprises should disburse funds needed for employee education according to a prescribed ratio. In addition, shortfalls can be made up in the following ways: Expenses for technological training involving the development of new technology or research on new products may be disbursed directly as a part of the production cost; expenses for staff training may be disbursed from the retained percentage of profit, surplus from block-grant expenditures, and after-tax profit; training expenses for projects of technological development, introduction of foreign technology, and technological innovation, or projects of optimizing the service of certain products (including expenses for sending employees abroad for advanced training) may be disbursed from the project funding itself. Funds for staff education in enterprises should be handled and disposed of by its educational division under the supervision of financial departments. If there is surplus in the funding that cannot be spent in the same year, the surplus can be carried over to the next year. For small-sized enterprises that cannot afford to offer staff education on their own and enterprises that do not run staff education programs efficiently, the departments in charge can set up concentrated staff education facilities and support such facilities with funds taken from respective staff education expenditures. When planning for either urban community construction or newly built enterprises in the future, we should, at the same time, plan for the construction of basic facilities for adult education and incorporate such projects in the investment plan for infrastructure investment projects. The various ministries and regions should set up a few key adult education bases that are better equipped and of a higher quality. In the area of peasant education, expenses that involve eliminating illiteracy, training of teachers, compiling of textbooks, exchange of experience, activities, and so forth, should all be disbursed from educational expenditures by education departments at different levels. Funds for county-run peasants' secondary specialized schools and peasants technical schools of different specialties and types should be raised by the county people's governments under unified arrangements and according to their respective financial strengths. The departments concerned, however, should lend the local governments certain financial aid. Funds for peasants' cultural and technical schools run by townships (towns) can be drawn as a certain percentage from the rural education surcharge, pooling funds from the people, collecting tuition fees, or launching work-study programs.

The State Council's Circular on the Division Between the Central and Local Government of the Above-plan Income from the Fund for the Construction of Key National Energy and Transport Projects and on Forbidding Localities from Levying Surcharges on Such Funds (November 17, 1984)

In December 1982, the CCP Central Committee and the State Council decided to collect a fund for the construction of key national energy and transport projects from the extrabudgetary funds of state-owned enterprises and undertakings, government organizations, army units, and local governments and from after-tax profits made by township collective enterprises under their administration at a rate of 10 percent of the income of the current year. At the same time, it was stipulated that some of the above-plan funds collected by the local governments were to be left entirely at the disposal of the provinces, autonomous regions, and municipalities directly under the central government. In August 1983, the State Council decided to raise the ratio for collection of the construction fund from 10 to 15 percent, beginning from the second half of that year. In 1984, quotas were assigned to all provinces, autonomous regions, and municipalities directly administered by the central government, as well as the various departments under the central authorities to collect the fund according to the 15 percent rate. The State Council did not stipulate how to dispose of the above-plan funds collected, however, and this needs clarification.

Comprehensive Planning Office of the State Commission on System Reform Reform: Options During a Key Period

Abstract 1. Implementing the divided channeling of taxes and profits. We should, in conjunction with the reform of the tax system, change the previous way of doing things whereby taxes and profits were bundled together and both were contracted. We should implement, instead, a system of contracting after-tax profits. When the enterprise contracts with the state, it should primarily contract asset returns and capital gains on fixed assets. The remainder of the profits should go entirely to the enterprise. In conjunction with this, we should also implement a system of repayment of loans from profits after paying income taxes and profit distribution.

Attitudes of business leaders and professional ecologists toward corporate social funding of environmental conservation

A study of South Africa's business leaders and professional ecologists reveals strong support for corporate social funding. However, the average level from after-tax profits considered appropriate for corporate social funding by business leaders (3%) is appreciably lower than the ecologists' average of 14,5%. Both business leaders and professional ecologists believe that environmental conservation deserves greater financial support than it currently receives. Education is rated as the most worthy sphere for corporate social funding by both groups. Whereas ecologists rate job creation and housing as of equal concern to environmental conservation, and health and welfare of lesser concern, business leaders rate them all as of greater worthiness for funding than environmental conservation. Both groups regard rural development as a less important target for funding (although the ecologists place a greater emphasis on this sphere than the business leaders do), and deem the arts and sport to be of low priority. The business leaders' preferences for funding follow their perceptions of the priority issues facing South Africa at present, whereas ecologists believe that such funding should be selective, rather than effectively being a back-up for government responsibilities. The expressed concern for support of population control, acknowledged to be the most serious conservation issue in South Africa at present, is offset by the low level of actual corporate support for this issue. Business leaders, in particular, claim that corporate social funding of environmental conservation is backed by shareholders.

Kaldor on the ‘discreet charm’ of the Chilean bourgeoisie

This article discusses Nicholas Kaldor's 1956 paper on Chile and its relevance today. Kaldor concludes that the main obstacle to Chile's development is neither natural, technical, nor economic, but political. He identified the low rate of accumulation as the basic problem due not to scarcity of investible resources, but to low investment by the property-owning class (the proportion of after-tax profits ploughed back into investment was 15 percent while the United Kingdom's was 60 percent). Kaldor proposed higher taxation of profits and an effective public investment program. Copyright 1989 by Oxford University Press.

Pesticides Growth Slows

The pesticide business hasn't fallen on hard times, but it isn't the business it used to be. Only a few years ago, many nonpesticide producers were looking with longing at the high profit margins being garnered by pesticide makers. Companies let it be known that they were actively seeking to acquire pesticide businesses, but usually the price was too high. Development of pesticides was a booming business, with each new product being hailed as the ultimate in ridding the world of a particular pest. Pesticides producers seemed to be almost coining money. Even though the risks were high, R&D soaked up a lot of money, field trials could take years, and the patent protection of an approved pesticide might last for only an average of seven years after introduction, makers could recoup their investment easily. And for some of the major pesticides producers, after-tax profit margins averaged 30 to 40%. But those days of unending ...

Linking prefunding factors and high-technology venture success: An exploratory study

This study reports on the exploratory phase of a research project on prefunding factors influencing the success of high-technology start-up companies. The study was done in collaboration with two major West Coast venture capital firms that allowed the authors full access to the due diligence files, investment proposals, and closing documents associated with eight ventures. Half of the eight ventures studied are currently public companies with sales that range from $65 million to $500 million and with an after-tax profit of about 10% of sales. The other half have either been dissolved or did not reach $3 million in sales within the five years following their funding. Information was obtained on those prefunding factors that were available for investor review prior to funding, such as the founders track records, the characteristics of the founding team, the nature of the target market, the technological strategy of the firm, the proposed composition of the board, and the deal structure. In spite of the small sample size, findings of this research revealed discernible differences between successful and unsuccessful firms. The founders of the successful ventures had more prior experience working together; tended to form larger, more complete teams; and had more extensive experience in the function they performed in the new venture. Successful founders also had experience in rapid growth firms that competed in the same industry as the start-up. The successful ventures targeted product-market segments with high buyer concentration in which, through technological advantage, their products could attain and sustain a competitive edge. Often this advantage was achieved by careful management of the product-development process, which resulted in early market entry and its corollary, reduced competition. On the other hand, some factors that the authors had predicted would allow them to distinguish between success and failure were not found to do so. Both successful and unsuccessful ventures targeted high growth markets, anticipated high gross margins, had founders with over five years of relevant experience, had experienced venture capitalists on their boards, and were characterized by a wide range of founder equity shares.

Impact of Income Tax Regulations on Profitability of Subsurface Drainage Investment in Canada and the United States

ABSTRACT THIS article examines the effect of prevailing income tax provisions in Canada and the United States on after-tax profitability of subsurface drainage investment. Income taxes make the profitability of drainage investment widely dispersed among the various income brackets. Tax provisions relating to drainage are considerably more restrictive in Canada than in the United States. As a consequence, after-tax drainage profitability in Canada is lower and varies more widely among the income brackets than in the United States.

Pitfalls in Using the Goldfeld-Quandt Test against Heteroscedasticity: A Comment on Howe and McFetridge

In an article published in this Journal, J.D. Howe and D.S. McFetridge employed an unidentified iterative technique to choose an acceptable deflator for eliminating heteroscedasticity from some regressions investigating across firm differences in RD and 2. that the exact a value chosen by HM might have had a dramatic effect on their empirical results and associated policy conclusions. The regressions presented here are based on American instead of Canadian data and employ fewer independent variables than HM used.' Such differences have little, if any, bearing on this paper's main points. The data source was Business Week's 1977, 1978, 1980, 1981, and 1982 RD net income after taxes but before extraordinary items (i.e., after-tax profits PR); and operating revenues (i.e., sales S). Ten particularly well-populated industry-years were chosen for in-depth analysis, but to save space only three of the more interesting are shown here.2 All the regressions reported below are of the following type: RDit = ao + aPRi,t-I + a2PRi't-12 + a3Sit + a4Sit2 + a5Sit3 + eit, where i refers to the ith firm, t to the tth year, and eit to the stochastic disturbance term. Before estimation, all variables were deflated by so.3 ACCEPTABLE DEFLATOR RANGES In the first stage of the research, many different S? deflators were tried. The purpose was to find three ranges of a values associated with regressions that pass a two-sided G-Q test at the 90 per cent, 95 per cent and 99 per cent levels of significance. The specific G-Q test employed required five steps: 1. Each industry-year sample was ordered according to ascending S values. 2. The middle thirds of the observations were omitted. I HM employed confidential Canadian Department of National Revenue data unavailable to us. The only source of R&D data for Canadian companies appears to be an annual Financial Post survey. The 1983 survey contained just fifty-one companies too small a sample to permit separate regressions for several different industry classifications. See Financial Post (1983, 21). 2 Partial results for the other cases are available on request from the author. 3 A detailed defense of the R&D equation would take us needlessly far from our present concerns. Suffice it to say that only the sales cubic was copied directly from HM'S work. For precedents in using lagged instead of current profits, see either Grabowski (1968) or McEachem and Romeo (1978). For encouragement to employ a profits quadratic instead of a linear specification, see Kamien and Schwartz (1975, 26). This content downloaded from 157.55.39.35 on Wed, 31 Aug 2016 05:10:09 UTC All use subject to http://about.jstor.org/terms