Taxes, Ownership and Capital Structure

46 Pages Posted: 30 Oct 2015 Last revised: 3 Mar 2016

Giovanna Nicodano

University of Turin - Department of Economics and Statistics; Collegio Carlo Alberto

Luca Regis

IMT Institute for Advanced Studies; University of Torino - Collegio Carlo Alberto

Date Written: December 16, 2015

Abstract

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

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

Giovanna Nicodano (Contact Author)

University of Turin - Department of Economics and Statistics ( email )

Turin, 10134
Italy

HOME PAGE: http://www.carloalberto.org/people/faculty/fellows/nicodano/

Collegio Carlo Alberto ( email )

via Real Collegio 30
Moncalieri, Torino 10024
Italy
390116705006 (Phone)

HOME PAGE: http://www.carloalberto.org/people/nicodano/

Luca Regis

IMT Institute for Advanced Studies ( email )

Piazza San Francesco 19
Lucca, 55100
Italy

University of Torino - Collegio Carlo Alberto ( email )

via Real Collegio 30
Moncalieri, Torino 10024
Italy

Paper statistics

Downloads
201
Rank
124,189
Abstract Views
672