@techreport{eprints2735,
          author = {Giovanna Nicodano and Luca Regis},
     institution = {IMT Institute for Advanced Studies Lucca},
            type = {EIC working paper series},
           month = {July},
       publisher = {IMT Institute for Advanced Studies Lucca},
            year = {2015},
           title = {Ownership, Taxes and Default},
        keywords = {JEL Classification Codes: G32, H25, H32, L22 - Keywords: Ownership structure, Capital structure, Dividend taxes, Thin Capitalization, Groups, Securitization, Private equity.},
             url = {http://eprints.imtlucca.it/2735/},
        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.}
}