IDEAS home Printed from https://ideas.repec.org/a/bla/jfinan/v49y1994i5p1893-1904.html
   My bibliography  Save this article

An Empirical Study of the Consequences of U.S. Tax Rules for International Acquisitions by U.S. Firms

Author

Listed:
  • Manzon, Gil B, Jr
  • Sharp, David J
  • Travlos, Nickolaos G

Abstract

This article examines the effect of tax factors on the equity values of U.S. multinational corporations making foreign acquisitions. Abnormal stock returns are found to be related to a tax variable that captures differences in the international tax status of acquiring firms but not related to a naive tax variable that captures differences between tax rates in target countries and the United States. The authors' evidence suggests that aggregate intercountry differentials in after-tax returns are competed away, while firm-specific, tax-related advantages (or disadvantages) are reflected in abnormal returns around the announcement date of the acquisition. Copyright 1994 by American Finance Association.

Suggested Citation

  • Manzon, Gil B, Jr & Sharp, David J & Travlos, Nickolaos G, 1994. "An Empirical Study of the Consequences of U.S. Tax Rules for International Acquisitions by U.S. Firms," Journal of Finance, American Finance Association, vol. 49(5), pages 1893-1904, December.
    • Handle: RePEc:bla:jfinan:v:49:y:1994:i:5:p:1893-1904
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0022-1082%28199412%2949%3A5%3C1893%3AAESOTC%3E2.0.CO%3B2-M&origin=repec
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Leonidas G Barbopoulos & Jo Danbolt & Dimitris Alexakis, 2018. "The role of earnout financing on the valuation effects of global diversification," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(5), pages 523-551, July.
    2. Moshfique Uddin & Agyenim Boateng, 2009. "An analysis of short‐run performance of cross‐border mergers and acquisitions," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 8(4), pages 431-453, October.
    3. Glambosky, Mina & Gleason, Kimberly & Murdock, Maryna, 2015. "Political risk and the factors that affect international bids," Global Finance Journal, Elsevier, vol. 28(C), pages 68-83.
    4. Moeller, Sara B. & Schlingemann, Frederik P., 2005. "Global diversification and bidder gains: A comparison between cross-border and domestic acquisitions," Journal of Banking & Finance, Elsevier, vol. 29(3), pages 533-564, March.
    5. Pablo, Eduardo, 2013. "Cross-border diversification through M&As in Latin America," Journal of Business Research, Elsevier, vol. 66(3), pages 425-430.
    6. Tomasz P. Bednarczyk & Dirk Schiereck & Hardrik N. Walter, 2010. "Cross-border acquisitions and shareholder wealth: Evidence from the energy and industry in Central and Eastern Europe," Journal of East European Management Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 15(2), pages 106-127.
    7. Şevkat Özgür & Franz Wirl, 2020. "Cross-Border Mergers and Acquisitions in the Oil and Gas Industry: An Overview," Energies, MDPI, vol. 13(21), pages 1-25, October.
    8. Andrey Golubov & Dimitris Petmezas & Nickolaos G. Travlos, 2013. "Empirical mergers and acquisitions research: a review of methods, evidence and managerial implications," Chapters, in: Adrian R. Bell & Chris Brooks & Marcel Prokopczuk (ed.), Handbook of Research Methods and Applications in Empirical Finance, chapter 12, pages 287-313, Edward Elgar Publishing.
    9. Shimizu, Katsuhiko & Hitt, Michael A. & Vaidyanath, Deepa & Pisano, Vincenzo, 2004. "Theoretical foundations of cross-border mergers and acquisitions: A review of current research and recommendations for the future," Journal of International Management, Elsevier, vol. 10(3), pages 307-353.
    10. Gregory, Alan & O'Donohoe, Sheila, 2014. "Do cross border and domestic acquisitions differ? Evidence from the acquisition of UK targets," International Review of Financial Analysis, Elsevier, vol. 31(C), pages 61-69.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jfinan:v:49:y:1994:i:5:p:1893-1904. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/afaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.