We argue that under the U.S. tax system, where individual investors are taxed separately from the corporations they own, cash-for-stock acquisition (CSA) is inter alia a profitable arbitrage. This argument is based on the idea that the burden of personal taxation creates a wedge between the...

This paper challenges accepted methods of calculating the effect of deferred realization on the effective rate of capital gains tax paid by common shareholders and their overall tax burden. Those methods are shown to implicitly assume the special case of gains accrued in lump sum, even under the...

Resemblance in portfolio composition of sheltered and unsheltered equity funds held by open-end U.S. investment companies is consistent with their practice of identifying sheltered vs. unsheltered claims on the same portfolios instead of segregating portfolios based on shareholders' tax...

Traditional static models of corporations' interior optimum leverage rely on institutional mechanisms such as taxes, bankruptcy costs, and agency costs. Theories of leverage indifference in the presence of risky debt depend on various features of perfect and complete markets and on the...

Roll [JFE 1977] demonstrates that the probability of early exercise of equity call options is low for small dividend payouts. Geske and Shastri [JBF 1985] show that unless dividends are small, put equity options would not be exercised early. Subsequently, Shastri and Tandon [JFM 1986] argue that...