Increasing Shareholder Value by Utilizing Tax Opportunities
The WACC is a calculation of the ‘after-tax’ cost of capital where the tax treatment for each capital component is different. In most countries, the cost of debt is tax deductible while the cost of equity isn’t, for hybrids this depends on each case.
Some countries offer beneficial tax opportunities that can result in an increase of operational cash flows or a reduction of the WACC.
This article elaborates on the impact of tax regulation on the WACC and argues that the calculation of the WACC for Belgian financing structures needs to be revised. Furthermore, this article outlines practical strategies for utilizing tax opportunities that can create shareholder value.
The Impact of Corporate Risk Management on Shareholder Value
This part looks at how risk management is an instrument that can be used to lower the WACC and create shareholder value.
Creating Shareholder Value - Towards an Optimal Credit Rating
The second article in this series on WACC discusses why the credit rating should not be a goal in itself, but the result of the corporate objective to maximize value for shareholders and other stakeholders. It elaborates on managing the WACC and creating shareholder value, which is the main focus of strategic decision-making.
The article describes the relationship between the WACC, shareholder value and the existence of an optimal credit rating.