The impact of bank mergers on corporate tax aggressiveness

Jie Chen, Tapas Mishra, Wei Song, Qingjing Zhang and Zhuang Zhang

Journal of Corporate Finance, 2024, vol. 84, issue C

Abstract: We study whether borrowers' opaque practices, such as tax aggressiveness, are affected by their lenders' engagement in mergers and acquisitions (M&As). Our findings suggest that borrowers' tax aggressiveness is negatively associated with bank mergers as banks increasingly rely on hard information in monitoring and lending practices following mergers. This relationship is more pronounced for borrowers that are more opaque in their information environments and have a greater need for credit, and when banks that have a greater intention to monitor borrowers and rely more on soft-information-based monitoring prior to the mergers. Our study contributes to the growing literature on whether and how bank consolidations affect borrowers' decision making.

Keywords: Tax aggressiveness; Banks; Mergers and acquisitions; Information transparency (search for similar items in EconPapers)
JEL-codes: D82 G21 G30 H26 M41 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:84:y:2024:i:c:s0929119924000026

DOI: 10.1016/j.jcorpfin.2024.102540

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