TAXES, FINANCIAL DECISIONS AND ORGANIZATIONAL FORM - EVIDENCE FROM PUBLICLY TRADED PARTNERSHIPS

Publicly Traded Partnerships (PTPs), also known as Master Limited Partnerships, are similar to U.S. corporations, yet they are not subject to corporate taxes. Given their mixture of corporate and partnership characteristics, PTPs provide an experiment for studying taxation and firm financial decisions. This paper compares the financial structure and dividend policies of PTPs and corporations in the oil and gas exploration industry. The results are consistent with hypotheses about taxes and financial decisions: controlling for other factors, PTPs pay more dividends and borrow less than similar corporations.