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International Taxation and the Direction and Volume of Cross-Border M&As




We show that the parent-subsidiary structure of multinational firms created by cross-border mergers and acquisitions is affected by the prospect of international double taxation. Specifically, the likelihood of parent firm location in a country following a cross-border takeover is reduced by high international double taxation of foreign-source income. At the same time, countries with high international double taxation attract smaller numbers of parent firms. A unilateral elimination of worldwide taxation by the United States is simulated to increase the proportion of parent firms locating in the United States following cross-border mergers and acquisitions from 53% to 58%. Copyright (c) 2009 The American Finance Association.

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  • Harry P. Huizinga & Johannes Voget, 2009. "International Taxation and the Direction and Volume of Cross-Border M&As," Journal of Finance, American Finance Association, vol. 64(3), pages 1217-1249, June.
  • Handle: RePEc:bla:jfinan:v:64:y:2009:i:3:p:1217-1249

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    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies


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