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International Taxation and Takeover Premiums in Cross-border M&As

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Author Info
Harry Huizinga () (Tilburg University and CEPR)
Johannes Voget () (Oxford University Centre for Business Taxation and Tilburg University)
Wolf Wagner (Tilburg University)

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Abstract

Cross-border M&As can trigger a higher international taxation of the target’s income. Non-resident dividend withholding taxes may be imposed by the target country, while additional corporate income taxation can be imposed by the acquiring country. Our evidence suggests that takeover premiums fully reflect non-resident dividend withholding taxes, while there is some evidence that they reflect corporate income taxation by the acquiring country as well. In contrast, acquiring firm stock market returns around the bid announcement do not appear to reflect either type of taxation. These results are consistent with previous findings that the gains of M&As primarily accrue to target shareholders.

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Publisher Info
Paper provided by Oxford University Centre for Business Taxation in its series Working Papers with number 0826.

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Date of creation: 2008
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Handle: RePEc:btx:wpaper:0826

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Related research
Keywords: international taxation; takeover premiums;

Other versions of this item:

Find related papers by JEL classification:
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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    Other versions:
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    Other versions:
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    Other versions:
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    Other versions:
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