—The topic of corporate cash holdings has gained a
lot of attention in academia recently. The current paper
investigates the valuation of cash holdings under distributed
profit-based corporate taxation. We show that the
cash-to-assets ratio has increased considerably since the
introduction of distributed profit-based taxation in Estonia.
Almost 1/3 of all the companies in Estonia had cash-to-assets
ratios above 50% in 2011. We argue that in order to value such
cash holdings, a discount at a size of tax burden associated with
profit distribution should be used both in case of cash as well as
—Cash holdings, company valuation, income
The authors are with the University of Tartu, Estonia (e-mail:
Cite: Priit Sander, Allan Teder, Karmen Viikmaa, and Mark Kantšukov, "The Distributed Profit Based Corporate Taxation, and the Valuation of Cash Holdings," International Journal of Trade, Economics and Finance vol.5, no.3, pp. 212-217, 2014.