Pons-Sanz, Vicente; Zuta, Shlomit; Ofer, Aharon; Ravid, S. - School of Management, Yale University - 2004
This paper demonstrates that preferred stock may arise as an optimal security in a tax-induced equilibrium. This result is driven by graduated tax schedules and by uncertainty. In a more general sense, our results can be interpreted as a template for including any security with a different tax...