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

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Author Info
Huizinga, Harry
Voget, Johannes
Wagner, Wolf

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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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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7182.

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Date of creation: Feb 2009
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Handle: RePEc:cpr:ceprdp:7182

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Related research
Keywords: international taxation; takeover premiums;

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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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