Financial leverage clienteles : Theory and evidence

  title={Financial leverage clienteles : Theory and evidence},
  author={E. Han Kim and Wilbur G. Lewellen and John J. McConnell},
This paper examines the hypothesis that investors will sort themselves out into tax-induced ‘financial leverage clienteles’ in which the common stocks of highly levered firms will be held by individuals with low personal tax rates, while the shares of firms with little or no leverage will be held by individuals with high personal tax rates. Although the idea of financial leverage clienteles has appeared in the literature before, the immediate motivation for this investigation is a recent paper… CONTINUE READING

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