A Note on Taxes and the Capital Structure of Partnerships, REITs, and Related Entities
Jaffe (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.
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/
|Order Information:|| Postal: Diane Quarles American Real Estate Society Manager of Member Services Clemson University Box 341323 Clemson, SC 29634-1323|
Web: http://pages.jh.edu/jrer/about/get.htm Email:
References listed on IDEAS
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.
When requesting a correction, please mention this item's handle: RePEc:jre:issued:v:8:n:2:1993:p:279-286. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (JRER Graduate Assistant/Webmaster)
If references are entirely missing, you can add them using this form.