%0 Report
%9 EIC working paper series
%A Nicodano, Giovanna
%A Regis, Luca
%D 2015
%F eprints:2735
%I IMT Institute for Advanced Studies Lucca
%K JEL Classification Codes: G32, H25, H32, L22 - Keywords: Ownership structure, Capital structure, Dividend taxes, Thin Capitalization, Groups, Securitization, Private equity.
%N 7
%T Ownership, Taxes and Default
%U http://eprints.imtlucca.it/2735/
%X 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.