International Capital Structure Equilibrium

摘要: This paper develops a theory of capital structure in an international setting with corporate and personal taxes. We generalize the Miller analysis to equilibrium characterized by differential taxation inflation otherwise perfect markets. Our highlights key role that tax arbitrage plays generating equilibrium, we set forth number mechanisms for transactions. close outlining some implications our national differences structure, International Fisher Effect, effects on yield differentials. AMONG MAJOR QUESTIONS REGARDING which arise are how (or whether) multiple jurisdictions currencies affect firm financing decisions bond market equilibrium. examine these questions way generalizing Miller's (1977) "Debt Taxes" model into setting. allows different regimes across countries as well possibility currencies, consequent exchange rate movements. In first part this paper, find Miller-type obtains under conditions analogous those required domestic particularly corporations play vehicles arbitrage. show that, if engage transactions equal footing, no optimal exists individual firms. Consequently, without further restrictions, rates alone incapable dictating particular firm. second extend consider rates, movement, draw additional analog With taxation, begin showing existence Effect both equity bonds. Although (and/or movements) may real subsidy