Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/18960
Authors: 
Panteghini, Paolo M.
Year of Publication: 
2005
Series/Report no.: 
CESifo Working Paper 1496
Abstract: 
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.
Subjects: 
capital structure
corporate taxation
neutrality
option pricing
JEL: 
H32
H25
Document Type: 
Working Paper

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