International taxation and takeover premiums in cross-border M&As

Huizinga, Harry, Voget, Johannes and Wagner, Wolf (2008) International taxation and takeover premiums in cross-border M&As. In: Annual Symposium 2008.

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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. This paper examines how these additional tax liabilities affect takeover premiums and thus the gains to target shareholders. Our evidence suggests that takeover premiums fully reflect non-resident dividend withholding taxes, while they reflect corporate income taxation by the acquiring country less than fully. The incidence of non-resident withholding taxation thus appears to be entirely on target shareholders. Hence, withholding taxes do not seem to serve the purpose of taxing foreign acquirers. This evidence is consistent with previous findings that the gains of M&As primarily accrue to target shareholders.

Item Type: Conference or Workshop Item (Speech)
Keywords: international taxation, takeover premiums
Subject(s): Taxation
Centre: Oxford University Centre for Business Taxation
Date Deposited: 04 May 2012 14:23
Last Modified: 12 Sep 2016 14:39

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