46 Pages Posted: 30 Oct 2015 Last revised: 3 Mar 2016
Date Written: December 16, 2015
This paper investigates the ownership connection between two firms that share a common controlling stockholder. Our model generates diverse organizations, including horizontal groups of United States 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 ownership mutations, in response to dividend taxes, to caps on interest deductions and "no bailout" rules.
Keywords: ownership structure, capital structure, dividend taxes, Thin Capitalization, groups, securitization, private equity
JEL Classification: G32, H32
Suggested Citation: Suggested Citation
Nicodano, Giovanna and Regis, Luca, Taxes, Ownership and Capital Structure (December 16, 2015). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 456/2015. Available at SSRN: https://ssrn.com/abstract=2682570 or http://dx.doi.org/10.2139/ssrn.2682570