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How do taxes affect cross-border acquisitions?
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Arulampalam, Wiji, Devereux, Michael P. and Liberini, Federica (2010) How do taxes affect cross-border acquisitions? Working Paper. Coventry: European Tax Policy Forum. (Unpublished)
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Official URL: http://www.etpf.org/papers/54xborder.pdf
Abstract
This paper uses firm-level data to investigate the impact of taxes on the location of mergers and acquisitions. Our theoretical framework suggests that there are many ways in which tax can influence such M&A activity. For example, it is possible that a higher tax rate in the country of the target company could make an acquisition of the tax more likely, less likely, or have no effect at all. Another possibility is that the difference between the home and host country tax rates has an effect. We combine financial and ownership data from a large number of companies in the ORBIS database for 2005 with domestic and cross-border acquisitions in the ZEPHYR database between 2006 and 2008. We estimate a model in which acquiring companies choose in which country to acquire a target company. The results suggest that the predominant effect is that a higher tax rate in the target country has a negative impact on the probability of an acquisition in that country.
| Item Type: | Working or Discussion Paper (Working Paper) | ||||
|---|---|---|---|---|---|
| Subjects: | H Social Sciences > HB Economic Theory H Social Sciences > HE Transportation and Communications |
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| Divisions: | Faculty of Social Sciences > Economics | ||||
| Publisher: | European Tax Policy Forum | ||||
| Place of Publication: | Coventry | ||||
| Official Date: | June 2010 | ||||
| Dates: |
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| Number of Pages: | 43 | ||||
| Institution: | University of Warwick | ||||
| Status: | Not Peer Reviewed | ||||
| Publication Status: | Unpublished | ||||
| Access rights to Published version: | Open Access (Creative Commons) | ||||
| Funder: | Hundred Group, ETPF, Economic and Social Research Council (ESRC) | ||||
| Grant number: | RES- 060-25-0033 |
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