Influence of Tax Rates on Ownership Type : Debt Choice, Valuation, and Leverage Gain

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dc.contributor.authorVan Dalsem, Shane
dc.contributor.authorHull, Robert M.en_US
dc.dateJune 2018
dc.date.accessioned2023-02-02T18:20:56Z
dc.date.available2023-02-02T18:20:56Z
dc.date.issued2018-06-1
dc.description.abstractAfter assigning the same before-tax cash flows and costs of borrowing, we examine the influence of tax rates on ownership type by computing valuation and leverage gain outcomes for debt choices. After determining the optimal debt-to-firm value ratios (ODVs) for each ownership type, we compare outcomes using no growth versus growth and different market risk scenarios. Despite being taxed differently, nonprofits and for-profits have very similar OD Vs but nonprofits get more benefit from growth. Even without an interest tax shield, nonprofits gain more in absolute dollars from leverage. For a growth nonprofit, the gain is also true in percentage terms.en_US
dc.description.sponsorshipKaw Valley Banken_US
dc.format.mediumPDFen_US
dc.identifier.otherSchool of Business Working Paper Series; No. 205en_US
dc.identifier.urihttps://hdl.handle.net/10425/3042
dc.language.isoen_USen_US
dc.publisherWashburn University. School of Businessen_US
dc.subjectCorporations - Financeen_US
dc.subjectFinancial leverageen_US
dc.subjectFinance - Mathematical modelsen_US
dc.subjectTaxation - Rates and tablesen_US
dc.titleInfluence of Tax Rates on Ownership Type : Debt Choice, Valuation, and Leverage Gainen_US
dc.typeWorking Paperen_US
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