search query: @indexterm Management buy-outs / total: 202
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| Author: | Leland, H. |
| Title: | LBOs and taxes: no one to blame but ourselves? |
| Journal: | California Management Review
1989 : FALL, VOL. 32:1, p. 19-29 |
| Index terms: | MANAGEMENT BUY-OUTS TAXATION |
| Language: | eng |
| Abstract: | Corporate tax savings explain more than 80 p.c. of the "value" created by the typical leveraged buyout (LBO). The tax system in the United States allows firms to deduct payments to bondholders but not to stockholders which provides a primary impetus to the LBO movement. The 1986 Tax Reform Act further increased the benefits to extreme leverage. While privately profitable, LBOs have created an economy much more at risk to even moderate economic downturns. The culprits are not the corporate "raiders", but those who created a tax code which virtually requires firms to use leverage. |
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