search query: @indexterm taxation / total: 1872
reference: 66 / 1872
| Author: | Guedhami, O. Pittman, J. |
| Title: | The importance of IRS monitoring to debt pricing in private firms |
| Journal: | Journal of Financial Economics
2008 : OCT, VOL. 90:1, p. 38-58 |
| Index terms: | USA private companies corporate governance taxation debt pricing |
| Freeterms: | ownership structure |
| Language: | eng |
| Abstract: | The link between the U.S. Internal Revenue Service (IRS) monitoring and yield spreads on private firms' bond issues is explored. After controlling for security-specific and other firm-specific determinants, there is provided evidence of debt financing being cheaper when the probability of a face-to-face IRS audit is higher. IRS oversight is found to have a stronger impact on bond pricing for private firms with high ownership concentration. This study implies that IRS monitoring plays a valuable corporate governance role by reducing information asymmetry evident in borrowing costs. |
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