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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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)|
|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|
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