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

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Author Info

  • Harry Huizinga

    ()
    (Tilburg University and CEPR)

  • Johannes Voget

    ()
    (Oxford University Centre for Business Taxation and Tilburg University)

  • Wolf Wagner

    (Tilburg University)

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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Bibliographic Info

Paper provided by Oxford University Centre for Business Taxation in its series Working Papers with number 0826.

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Date of creation: 2008
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Handle: RePEc:btx:wpaper:0826

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Keywords: international taxation; takeover premiums;

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Cited by:
  1. Hebous, Shafik & Ruf, Martin & Weichenrieder, Alfons J., 2011. "The Effects Of Taxation On The Location Decision Of Multinational Firms: M&A Versus Greenfield Investments," National Tax Journal, National Tax Association, vol. 64(3), pages 817-38, September.
  2. Shafik Hebous & Martin Ruf & Alfons Weichenrieder, 2010. "The Effects of Taxation on the Location Decision of Multinational Firms: M&A vs. Greenfield Investments," CESifo Working Paper Series 3076, CESifo Group Munich.

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