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Taxes and Mergers in Sweden

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  • Modén, Karl-Markus

    (Research Institute of Industrial Economics (IFN))

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    Abstract

    This paper studies the relative importance of tax incentives as merger motives in the Swedish industry during the period 1983-1987. Several econometric models are estimated and statistical tests performed. The tax-hypothesis is contrasted with an alternative hypothesis, suggested by Jensen, which explains mergers as a way for independent managers to increase their personal power. Neither hypothesis get any strong support in this study, the evidence is somewhat stronger in favor of Jensen's theory however.

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    File URL: http://www.ifn.se/wfiles/wp/wp242.pdf
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    Bibliographic Info

    Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 242.

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    Length: 24 pages
    Date of creation: Dec 1989
    Date of revision:
    Handle: RePEc:hhs:iuiwop:0242

    Contact details of provider:
    Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
    Phone: +46 8 665 4500
    Fax: +46 8 665 4599
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    Web page: http://www.ifn.se/
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    Related research

    Keywords: Tax incentives; merger motives; manager independence;

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    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Alan J. Auerbach & David Reishus, 1986. "Taxes and the Merger Decision: An Empirical Analysis," NBER Working Papers 1855, National Bureau of Economic Research, Inc.
    2. Alan J. Auerbach, 1981. "Stockholder Tax Rates and Firm Attributes," NBER Working Papers 0817, National Bureau of Economic Research, Inc.
    3. Lewellen, Wilbur G, 1971. "A Pure Financial Rationale for the Conglomerate Merger," Journal of Finance, American Finance Association, vol. 26(2), pages 521-37, May.
    4. Tobin, James, 1969. "A General Equilibrium Approach to Monetary Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 1(1), pages 15-29, February.
    5. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    6. Galai, Dan & Masulis, Ronald W., 1976. "The option pricing model and the risk factor of stock," Journal of Financial Economics, Elsevier, vol. 3(1-2), pages 53-81.
    7. Auerbach, Alan J, 1983. "Taxation, Corporate Financial Policy and the Cost of Capital," Journal of Economic Literature, American Economic Association, vol. 21(3), pages 905-40, September.
    8. Smith, Clifford W. & Stulz, René M., 1985. "The Determinants of Firms' Hedging Policies," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 20(04), pages 391-405, December.
    9. Palepu, Krishna G., 1986. "Predicting takeover targets : A methodological and empirical analysis," Journal of Accounting and Economics, Elsevier, vol. 8(1), pages 3-35, March.
    10. DeAngelo, Harry & Masulis, Ronald W., 1980. "Optimal capital structure under corporate and personal taxation," Journal of Financial Economics, Elsevier, vol. 8(1), pages 3-29, March.
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