International taxation and M&A prices

Arbeitspapier

We show that corporate taxation systems regarding foreign dividends and capital gains across 49 countries differ in many aspects, contradicting the requirements for capital ownership neutrality and indicating that ownership patterns are distorted. Consequently, a national tax policy maker may ask which taxation system improves the position of its multinational entreprises in bidding for foreign targets. To address this question, we develop a theoretical model on the impact of foreign dividends and capital gains taxation on cross-border M&A prices from the acquirer's perspective and theoretically compare different taxation systems. In a next step, we empirically validate our model in a regression analysis on a large cross-border M&A data set. Based on this analysis, we find that foreign dividends taxation rather than capital gains taxation impacts M&A prices. Finally, we provide tax policy suggestions.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ZEW Discussion Papers ; No. 17-040

Classification and Topics

• Classification: Wirtschaft ; Multinational Firms; International Business ; Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance ; Business Taxes and Subsidies including sales and value-added (VAT) ; Tax Evasion and Avoidance ; Fiscal Policies and Behavior of Economic Agents: Firm ; State and Local Government; Intergovernmental Relations: Interjurisdictional Differentials and Their Effects
• Subject: International taxation ; Repatriation taxes ; Capital gains taxes ; Lock-in effect ; Multinational entities ; Cross-border M&As

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): von Hagen, Dominik ; Pönnighaus, Fabian Nicolas
• Event: Veröffentlichung
• (who): Zentrum für Europäische Wirtschaftsforschung (ZEW)
• (where): Mannheim
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/170581
• URN: urn:nbn:de:bsz:180-madoc-435993
• Last update: 10.03.2025, 11:43 AM CET