Real Effects of International Tax Planning: Evidence from Domestic Acquisitions
Publication Type
Conference Paper
Publication Date
12-2014
Abstract
We examine whether and how the tax haven subsidiary profiles of U.S. acquirers and targets affect M&A pairing. Using disclosed material subsidiary data, we develop two measures of tax haven subsidiary relatedness between the acquirer and its target. Examining the associations of these measures with the probability of merger pair formation, the results suggest that acquirers are more likely to select targets whose subsidiaries are located in tax havens similar to their own, consistent with economies of scale in tax planning. This relation suggests that firms’ past tax planning decisions have significant effects on their future real corporate decisions.
Keywords
Tax Planning, Tax Havens, Mergers and Acquisitions
Discipline
Accounting | Taxation
Research Areas
Financial Performance Analysis
Publication
American Accounting Association International Section Mid-Year Meeting 2014, February 20-22, San Antonio, TX, USA; Auckland Finance Meeting 2014, December 18-20 December
First Page
1
Last Page
42
City or Country
Auckland
Citation
CHOW, Travis and KLASSEN, Kenneth.
Real Effects of International Tax Planning: Evidence from Domestic Acquisitions. (2014). American Accounting Association International Section Mid-Year Meeting 2014, February 20-22, San Antonio, TX, USA; Auckland Finance Meeting 2014, December 18-20 December. 1-42.
Available at: https://ink.library.smu.edu.sg/soa_research/1440
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.