Taxes and the Choice of Issuing Preferred Stock vs. Debt
| Autor: | Carol Olson Houston, Arthur L. Houston, David P. Ely |
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| Rok vydání: | 2002 |
| Předmět: | |
| Zdroj: | Journal of the American Taxation Association. 24:29-45 |
| ISSN: | 1558-8017 0198-9073 |
| DOI: | 10.2308/jata.2002.24.1.29 |
| Popis: | This study provides descriptive evidence on the link between a firm's expected marginal tax rate and its use of preferred stock as an alternative to financing with long-term debt. Regressions are estimated on a sample of industrial firms that issued preferred stock and a control group, matched on industry and size, that contemporaneously issued long-term debt. Substantial tax effects are found for a full sample of firms that issued any type of preferred stock, as well as a large subsample that issued only convertible preferred stock, frequently used to facilitate mergers and acquisitions. For the typical firm, a decrease in its expected marginal tax rate from the 75th to the 25th percentile is associated with a 33 percent increase in the likelihood it will issue preferred stock. This financing behavior is consistent with a goal of enhancing tax benefits. |
| Databáze: | OpenAIRE |
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