ERROR: relation "spark21_proceeding_action_tracker" does not exist LINE 1: INSERT INTO spark21_proceeding_action_tracker(action_tracker... ^There was an unexpected database error.ERROR: relation "spark21_proceeding_action_tracker" does not exist LINE 1: INSERT INTO spark21_proceeding_action_tracker(action_tracker... ^There was an unexpected database error.AAA Spark Meeting of Regions: Firm Value and Entity Choice in Closely Held Business Organizations: Do Taxes Play a Role?

AAA Spark Meeting of Regions

Individual Submission Summary
Share...

Direct link:

Download

Firm Value and Entity Choice in Closely Held Business Organizations: Do Taxes Play a Role?

Mon, May 24, 2:00 to 3:00pm, Virtual, TBA

Abstract

This paper examines the role of tax on firm value of closely held businesses. Using sales transactions of closely held business organizations as a proxy for firm value, the double tax system applicable to C corporations versus the single level of tax on passthrough businesses is expected to result in lower firm value for passthrough entities than comparable C corporations. This theoretical assumption is based on increased pricing flexibility available for firms facing a single level of tax over that of entities subject to double taxation. A dataset of nearly 30,000 closely held business sales was evaluated to find that passthrough entities are associated with lower firm value than comparable C corporations. This finding is important since prior research has produced conflicting results. This study contributes to the literature by examining a more comprehensive dataset, including all forms of passthrough entities, and improving the methodology used in earlier studies.

Author