In the presence of underutilization of a tax shield or leverage-related deadweight costs, the after-tax equilibrium model
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In the presence of underutilization of a tax shield or leverage-related deadweight costs, the after-tax equilibrium model discussed in Kim (1989) says that the equilibrium is reached at a value of \(t_{c}\) lower than the top tax rate. In this case, what is the best strategy for companies at the top corporate tax rate?
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