Corporate Debt, Hybrid Securities and the Effective Tax Rate

38 Pages Posted: 13 Jun 2008

See all articles by Paolo M. Panteghini

Paolo M. Panteghini

Department of Economics and Management; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Date Written: June 2008

Abstract

In this article we use contingent-claim analysis to calculate the effective tax rate (ETR) under corporate debt finance. In particular, we deal with both pure debt and two of the most well-known hybrid securities, i.e., convertible, and reverse convertible bonds. We show that: 1) effective taxation crucially depends on the characteristics of debt, and 2) existing measures of ETR can be dramatically biased, since they do not account for debt maturity, default risk or the ability to convert debt into equity.

Keywords: capital structure, contingent claims, corporate taxation, hybrid securities

JEL Classification: H2

Suggested Citation

Panteghini, Paolo M., Corporate Debt, Hybrid Securities and the Effective Tax Rate (June 2008). CESifo Working Paper Series No. 2329, Available at SSRN: https://ssrn.com/abstract=1145187

Paolo M. Panteghini (Contact Author)

Department of Economics and Management ( email )

Contrada Santa Chiara 50
BRESCIA, BS 25122
Italy

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.cesifo.de

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
230
Abstract Views
884
rank
145,540
PlumX Metrics