DISCUSSION OF Organizational Form and Taxes: An Empirical Analysis of Small Businesses.

In this article the author comments on the research paper by Benjamin C. Ayers, C. Bryan Cloyd, and John R. Robinson, analyzing the relations between organizational form and taxes. According to the author the paper is based on the notion that organizational form is a variable that firms chooses to maximize expected after-tax investor wealth. It identifies the statistically significant economic factors associated with various organizational forms through the use of logit analysis, where organizational form is the dependent variable and various tax and nontax factors are the independent variables. The results for the three paired-comparisons generally suggest that risk of personal injury, risk of failure, firm size, number of owners, firm age, and industry members are relevant variables. He remarks that while the sample data used in the paper provides unique information about each organizational form it is not well balanced across the various dimensions of the four-factor model. The paper by Ayers and others continues and extends a line of research on an issue that, until recently, was little studied by academicians.