Taxes, Ownership and Capital Structure

Taxes, Ownership and Capital Structure

Giovanna Nicodano, Luca Regis

Series number :

Serial Number: 
456/2015

Date posted :

October 01 2015

Last revised :

November 19 2015
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Keywords

  • ownership structure • 
  • capital structure • 
  • Dividend Taxes • 
  • Thin Capitalization • 
  • groups • 
  • Securitization • 
  • private equity

This paper studies the ownership connection between two units that share a common controlling entity. Our results generate diverse organizations, including the horizontal groups of US family firms and the hierarchical ownership of both multinationals and European groups. The driver of ownership is the optimal capital structure associated with the tax-bankruptcy trade-off.

We also examine optimal mutations in response to dividend taxes, to caps on interest deductions and to ?no bailout? rules.

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Published in

Published in: 
Publication Title: 
Journal of Financial Economics

Authors

Real name: 
Luca Regis