Tax-exempt debt and the capital structure of nonprofit organizations: An application to hospitals

• 成果类型: Article
• 署名作者: Wedig, GJ; Hassan, M; Morrisey, MA
• 署名单位: University of Alabama System; University of Alabama Birmingham
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• 发表日期: 1996
• 页码: 1247-1283
• 关键词: INVESTMENT DECISIONS; OWNERSHIP; determinants; BEHAVIOR

摘要

The availability of tax-exempt financing provides nonprofit (NP) organizations with their own tax-based incentives to issue debt. In this article, we develop a theoretical model in which NPs gain an indirect arbitrage from tax-exempt debt issuance, constrained by: 1) the requirement that fixed investment exceed tax-exempt debt flows (the project financing constraint), and 2) the constraint against share issuance. These constraints cause them to impute tax benefits to projects that afford access to the tax-exempt bond market. Empirical tests indicate that NP hospitals behave as if they have target levels of tax-exempt debt. Debt targeting is constrained by the availability of capital projects, while excess debt capacity stimulates investment.