Evidence from Tax-Exempt Firms on Motives for Participating in Sale-Leaseback Agreements
Previous research finds evidence that tax factors motivate the participants in leasing transactions. Tax-arbitrage arguments predict that leasing participants gain when the lessorâ€™s tax rate exceeds that of the lessee. The research employs a sample of effectively tax-exempt REIT lessors to explore alternative leasing motives. Changes in REIT qualification rules are examined to develop an Agency-Cost, and competing Income-Retention Hypothesis for lessors. The rules and changes suggest that REIT management has the incentive, motive and opportunity to make real-estate investments quickly. The evidence developed is consistent with agency-costs arising from the possibility that they may overpay for properties.
Volume (Year): 28 (2006)
Issue (Month): 4 ()
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