Havenly acquisitions

Burcin Col and Vihang Errunza

Journal of International Financial Markets, Institutions and Money, 2022, vol. 77, issue C

Abstract: We explore the valuation, tax and post-merger performance consequences of M&As with tax haven firms. Using an international sample of cross-border mergers over the period 1989 to 2010, we find that acquirers of tax haven firms decrease their effective tax rates significantly in two years following the M&As. The announcement returns to acquirers of tax haven firms are, on average positive but lower relative to a control sample of non-tax motivated M&As. Lower returns are associated with potential agency costs, taxpayer/consumer backlash as well as relatively poor operating and sales performance of the acquirers following these acquisitions.

Keywords: Tax haven; Cross-border mergers; Tax avoidance; Corporate governance (search for similar items in EconPapers)
JEL-codes: G3 G34 G38 H2 H26 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:77:y:2022:i:c:s1042443121002079

DOI: 10.1016/j.intfin.2021.101504

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