How Prevalent is Tax Arbitrage? Evidence from the Market for Municipal Bonds

Although tax arbitrage is central to the literatures on tax capitalization, implicit taxes, and even capital structure, there is little empirical evidence of the extent to which firms actually engage in tax arbitrage. This paper provides some evidence on the topic by focusing on a simple and observable corporate arbitrage strategy in the market for municipal bonds. It poses a puzzle for the literature, however, in that we find little evidence of municipal bond tax arbitrage by non-financial corporations. The overwhelming majority of firms are not engaging in the arbitrage at all and even among those engaged in arbitrage, many firms do less than a safe-harbor amount allowed by the tax authorities. Such a pattern is consistent with the presence of both fixed and marginal (i.e., that depend on size of the position) costs of arbitrage, though we cannot observe what those costs are.

Alternatives in Education - Evaluation of Rat Simulators in Laboratory Animal Training Courses from Participants' Perspective

In laboratory animal science (LAS) education and training, five simulators are available for exercises on handling and routine procedures on the rat, which is—beside mice—the most commonly used species in LAS. Since these simulators may have high potential in protecting laboratory rats, the aim of this study is to investigate the simulators’ impact on the 3R (replace, reduce, refine) principle in LAS education and training. Therefore, the simulators were evaluated by 332 course participants in 27 different LAS courses via a practical simulator training workshop and a paper-based two-part questionnaire—both integrated in the official LAS course schedule. The results showed a high positive resonance for simulator training and it was considered especially useful for the inexperienced. However, the current simulators may not completely replace exercises on live animals and improvements regarding more realistic simulators are demanded. In accordance with literature data on simulator-use also in other fields of education, more research on simulators and new developments are needed, particularly with the aim for a broad implementation in LAS education and training benefiting all 3Rs

Alternatives in Education—Rat and Mouse Simulators Evaluated from Course Trainers’ and Supervisors’ Perspective

Simulators for training in laboratory animal science bear great potential to overcome the dilemma between the present demand for high-quality practical training involving live animals whilst implementing the “3R principle” (Replace, Reduce, Refine) according to the Directive 2010/63/EU. Currently, one mouse and six rat simulators are available, but only few data on them exist. To advance simulator-based training, an online survey for course trainers and supervisors of laboratory animal training courses focusing mice and rats was conducted, as these groups are most aware of its implementation due to applying alternative education and training methods regularly. This study reflects the current awareness, implementation, and satisfaction concerning methodical and practical criteria of the simulators including the requirements for a new development of 35 course trainers and supervisors who completed a German online survey conducted between May 2018 and June 2019. Although the study revealed a high awareness of existing simulators, their implementation is rather low, perhaps due to them not meeting certain demands. Generally, an approval of simulator-based training and a demand for user-optimized, realistic, financially affordable, and robust rat and mouse simulators were indicated, which may strongly benefit the 3Rs and animals in all experimental areas.Peer Reviewe

The effect of taxes on the structure of corporate acquisitions

This study investigates tax and non-tax determinants of corporate acquisition structure. In contrast to previous research, this study analyzes acquisitions from an investment financing perspective and investigates the tax implications of transaction structure for all three contracting parties--acquiring firm, target firm and target firm shareholders. Results indicate that the probability of an equity-financed tax-free transaction structure is an increasing function of the acquiring firm's likelihood of tax exhaustion. The probability of a debt-financed taxable transaction is a decreasing function of the percentage of the acquiring firm's value represented by growth opportunities (market to book ratio), and an increasing function of acquiring firm leverage and size. The results provide mixed support for the notion that target firm tax attributes and potential target firm shareholder capital gains tax liabilities influence acquisition structure. The Tax Reform Act of 1986 was expected to increase the likelihood that corporate acquisitions would be completed as tax-free transactions. Evidence in this study fails to support the conclusion that TRA86 impacted the way in which corporate acquisitions are consummated in the aggregate. Furthermore, results indicate that TRA86 did not modify the impact, on acquisition structure, of target firm tax attributes or shareholder capital gains tax liabilities. Overall, this study provides new evidence that tax and non-tax characteristics of acquiring firms are important determinants of the structure of corporate acquisitions