International Taxation and the Direction and Volume of Cross-Border M&As

Harry P. Huizinga and Johannes Voget

Journal of Finance, 2009, vol. 64, issue 3, pages 1217-1249

Abstract: We show that the parent-subsidiary structure of multinational firms created by cross-border mergers and acquisitions is affected by the prospect of international double taxation. Specifically, the likelihood of parent firm location in a country following a cross-border takeover is reduced by high international double taxation of foreign-source income. At the same time, countries with high international double taxation attract smaller numbers of parent firms. A unilateral elimination of worldwide taxation by the United States is simulated to increase the proportion of parent firms locating in the United States following cross-border mergers and acquisitions from 53% to 58%. Copyright (c) 2009 The American Finance Association.

Date: 2009

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Working Paper: International Taxation and the Direction and Volume of Cross-Border M&As (2006)
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