Working Paper No. 841

Ownership Efficiency and Tax Advantages: The Case of Private Equity Buyouts

Published: June 11, 2010, revised May 2011Pages: 32Keywords: Capital Gains Tax; Corporate Tax; Ownership Efficiency; Private Equity; Buyouts; LBOs; M&AsJEL-codes: D20; F23; G18; H20; H25; H26; L10; L13

Ownership Efficiency and Tax Advantages: The Case of Private Equity Buyouts Pehr-Johan Norbäck, Lars Persson and Joacim Tåg

Commentators on the private equity industry often claim that favorable tax treatment gives private equity firms advantages in the market for corporate control. But we show that tax advantages do not affect the equilibrium ownership of corporate assets when acquisition costs are fully deductible since buyers' valuations of assets are then independent of taxes. However, tax advantages are of importance under limited bidding competition, limited deductibility and in the presence of oligopolistic externalities in the product market. We also show that from an efficiency perspective, there are too many acquisitions in a double taxation system because acquisitions create deductions for buyers that are not available to sellers.


Pehr-Johan Norbäck


Ph: +46 8 665 4522
Mob: +46 73 547 3379

Joacim Tåg


Ph: +46 8 665 4524

Sick of Inequality?

An Introduction to the Relationship between Inequality and Health

Sick of Inequality.jpg

In this book Andreas Bergh, Therese Nilsson, IFN and Lund University, and Daniel Waldenström, IFN and Paris School of Economics, France, review the latest research on the relationship between inequality and health. What does inequality mean for our health? Does increasing income inequality affect outcomes such as obesity, life expectancy and subjective well-being?


Seminars organized by IFN


To present ongoing research informal brown-bag seminars are held on Mondays at 11:30 am. This is an opportunity for IFN researchers to test ideas and results.

Academically oriented seminars are most of the time held on Wednesdays at 10 am. At these events researchers from IFN and other institutions present their research.

In addition, IFN organizes seminars open to the public. Topics for these are derived from the IFN research.

Research Institute of Industrial Economics, Grevgatan 34 - 2 fl, Box 55665, SE-102 15 Stockholm, Sweden | Phone: +46-(0)8-665 45 00 |