Debt Management Under Corporate and Personal Taxation

David C. Mauer · Wilbur G. Lewellen

43 citations0/0 files storedThe Journal of Finance

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Corporate Finance and Governance Corporate Taxation and Avoidance Financial Reporting and Valuation Research

Abstract

ABSTRACT The presence of long‐term debt in a corporation's capital structure is shown to give rise to a valuable tax‐timing option that can be exercised by the firm on behalf of its shareholders. This option, which is not available if the firm is fully equity financed, implies that leverage will have a positive tax effect on total firm value even if there is no such effect associated with the tax deductibility of the coupon interest payments on debt. The more volatile interest rates and bond prices are, the more valuable the tax‐timing option and the larger the favorable impact of debt on shareholder wealth.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 43 citations exist upstream.

References

1976Theory of the firm: Managerial behavior, agency costs and ownership structure 1984Corporate financing and investment decisions when firms have information that investors do not have 1958The Cost of Capital, Corporation Finance and the Theory of Investment 1977Determinants of corporate borrowing 2008The cost of capital, corporation finance and the theory of investment 1984Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have 1963CORPORATE INCOME TAXES AND THE COST OF CAPITAL: A CORRECTION 1977The Determination of Financial Structure: The Incentive-Signalling Approach

Cited by

1993OPTIMAL BOND CALL POLICIES UNDER TRANSACTIONS COSTS 2009Ownership structure and debt maturity: new evidence from Spain 1995Corporate Debt Maturity Policy and Investor Tax-Timing Options: Theory and Evidence 1999Bank monitoring and the maturity structure of Japanese corporate debt issues 2003Early and late calls of convertible bonds: Theory and evidence

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.