A Note on Taxes and the Capital Structure of Partnerships, REITs, and Related Entities
AbstractJaffe (1991) shows that the value of partnerships and REITs is generally invariant to leverage, although certain tax law provisions can result in an inverse relationship between value and leverage. This paper extends Jaffe's analysis to consider recourse and nonrecourse partnership debt, and special allocations of tax items financed by borrowings. It is shown that the relationship between value and leverage for S Corporations is similar to REITs with one added situation where value is inversely related to leverage. Finally, transaction costs can allow for a positive relationship between partnership leverage and value, a situation not addressed by Jaffe.
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Bibliographic InfoArticle provided by American Real Estate Society in its journal Journal of Real Estate Research.
Volume (Year): 8 (1993)
Issue (Month): 2 ()
Contact details of provider:
Postal: American Real Estate Society Clemson University School of Business & Behavioral Science Department of Finance 401 Sirrine Hall Clemson, SC 29634-1323
Web page: http://www.aresnet.org/
Postal: Diane Quarles American Real Estate Society Manager of Member Services Clemson University Box 341323 Clemson, SC 29634-1323
Find related papers by JEL classification:
- L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Howe, John S & Shilling, James D, 1988. " Capital Structure Theory and REIT Security Offerings," Journal of Finance, American Finance Association, vol. 43(4), pages 983-93, September.
- Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
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