Nicodano, Giovanna and Regis, Luca Ownership, Taxes and Default. EIC working paper series #7/2015 IMT Institute for Advanced Studies Lucca ISSN 2279-6894. (Submitted)
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Abstract
This paper determines ownership and leverage of two units facing a tax- bankruptcy trade-o�. Connected units have higher leverage and lower tax burden, because of internal support through both bailouts and corporate dividends. Owner- ship adjusts to additional tax provisions. A hierarchical group with a wholly-owned subsidiary results from Thin Capitalization rules. The presence of corporate divi- dend taxes generates horizontal groups, or a Special Purpose Vehicle, or a private equity fund. Combinations of tax provisions contain tax savings, debt and default in connected units. No bailout provisions, such as the Volcker rule, succeed in reducing leverage and default.
| Item Type: | Working Paper (EIC working paper series) |
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| Uncontrolled Keywords: | JEL Classification Codes: G32, H25, H32, L22 - Keywords: Ownership structure, Capital structure, Dividend taxes, Thin Capitalization, Groups, Securitization, Private equity. |
| Subjects: | H Social Sciences > HB Economic Theory H Social Sciences > HG Finance |
| Research Area: | Economics and Institutional Change |
| Depositing User: | Caterina Tangheroni |
| Date Deposited: | 30 Jul 2015 15:03 |
| Last Modified: | 31 Jul 2015 10:30 |
| URI: | http://eprints.imtlucca.it/id/eprint/2735 |
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