M&A and the Tax Benefits of Debt Financing

Konferenzbeitrag

I analyze the e ffects of profi t taxation on the fi nancing decision of corporate acquisitions. The deductibility of interest expenses from the corporate tax base creates an incentive for acquiring companies to fi nance a takeover with debt. Regarding the particular decision how to finance the considered deals results are not robust but looking at the whole capital structure development of acquirers I fi nd that an increase of the statutory tax rate by one %-point is associated with an increase of the debt ratio by 0.57 %-points during the acquisition period.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2013: Wettbewerbspolitik und Regulierung in einer globalen Wirtschaftsordnung - Session: Taxation I ; No. A06-V1

Classification and Topics

• Classification: Wirtschaft ; Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance ; Business Taxes and Subsidies including sales and value-added (VAT) ; Fiscal Policies and Behavior of Economic Agents: Firm

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Scheuering, Uwe
• Event: Veröffentlichung
• (who): ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft
• (where): Kiel und Hamburg
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/79817
• Last update: 10.03.2025, 11:42 AM CET