Financial and accounting professionals, the IRS, and the legal community continually deliberate the value of a business based on its legal structure—most often comparing the value of a C-Corporation to pass-through entities such as S-Corporations and limited liability companies. Despite the continued deliberations and various court rulings, the cleavages of thought have not converged on a single hypothesis of value. We provide an empirical analysis on M&A transaction data that spans nearly two decades. Specifically, we conduct multiple ANOVA tests, and a programmatic matching analysis of nearly identical pass-through entities and C-Corporation transactions that occurred in the same industry. The results validate the premise that there exists no pass-through entity valuation premium.

JEL Classifications: C60; G12; G32; G34; H29; K22.

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