S-based taxation under default risk

• 成果类型: Article
• 署名作者: Panteghini, Paolo M.
• 署名单位: University of Brescia
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2005.12.004
• 发表日期: 2006
• 页码: 1923-1937
• 关键词: capital structure; corporate taxation; neutrality; option pricing

摘要

This article studies the characteristics of a S-based tax system under default risk. In particular we show that its neutrality properties depend on whether debt is protected or unprotected. In the former case, this system is neutral. In the latter case, where default timing is optimally chosen by shareholders, the S-based system is neutral with respect to real decisions only if the firm's and the lender's tax rate are equal. However, the shareholders' decision to default is always distorted. (c) 2006 Elsevier B.V. All rights reserved.