Organizational Forms, Taxation, and Capital: New Evidence
Publication Date
2-10-2025
Abstract
Relative to noncorporations, corporations' double taxation rates in the US have declined since 1987, predicting that investors will reallocate capital among organizational forms. To test the prediction, we investigate a special sample of noncorporations: publicly-traded partnerships (PTPs). As noncorporate tax efficiency declines, measures of PTP capitalization within industries decline, but only after institutional investors obtain passthrough taxation for partnership income after 2004. PTP equity first day returns following initial public offerings are greater after 2004 than before, consistent with underpricing hypotheses. External to PTPs, mergers and acquisitions show capital flows from noncorporations to corporations as corporate taxes decline.
Document Type
Article
Keywords
Capital, Business Structure, Taxation, Institutions
Disciplines
Accounting
DOI
10.2139/ssrn.5131519
Source
SMU Cox: Finance (Topic)
Language
English
