TAX‐TIMING OPTIONS, LEVERAGE, AND THE CHOICE OF CORPORATE FORM

Douglas Emery, Wilbur G. Lewellen, David C. Mauer

Research output: Contribution to journalArticle

15 Citations (Scopus)

Abstract

The tax‐timing options associated with opportunities to trade corporate securities are examined. The availability of such options to both the firm and its securityholders is shown to create incentives for, and thereby to add to the possible explanation of, three empirically observed financial phenomena: (1) the existence of complex corporate capital structures; (2) the presence of debt in those capital structures; and (3) corporate spin‐offs as vehicles to increase the total market value of a firm's assets. A set of symmetrical arguments also offers a reason to expect at least one negative effect on shareholder wealth from mergers of publicly traded companies.

Original languageEnglish (US)
Pages (from-to)99-110
Number of pages12
JournalJournal of Financial Research
Volume11
Issue number2
DOIs
StatePublished - Jan 1 1988
Externally publishedYes

Fingerprint

Leverage
Capital structure
Mergers
Corporate security
Incentives
Market value
Assets
Shareholder wealth
Spin-offs
Debt

ASJC Scopus subject areas

  • Accounting
  • Finance

Cite this

TAX‐TIMING OPTIONS, LEVERAGE, AND THE CHOICE OF CORPORATE FORM. / Emery, Douglas; Lewellen, Wilbur G.; Mauer, David C.

In: Journal of Financial Research, Vol. 11, No. 2, 01.01.1988, p. 99-110.

Research output: Contribution to journalArticle

Emery, Douglas ; Lewellen, Wilbur G. ; Mauer, David C. / TAX‐TIMING OPTIONS, LEVERAGE, AND THE CHOICE OF CORPORATE FORM. In: Journal of Financial Research. 1988 ; Vol. 11, No. 2. pp. 99-110.
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