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U.S. tax inversions and shareholder wealth effects

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  • Laing, Elaine
  • Gurdgiev, Constantin
  • Durand, Robert B.
  • Boermans, Boris

Abstract

We examine a sample of corporate inversions from 1993 to 2015 by firms active in the U.S. markets and find that shareholders experience positive abnormal returns in the short-run. In the long-run, inversions have a deleterious effect on shareholder wealth. The form of the inversion and country-pair differences in geographic distance, economic development and corporate governance standards are determinants of shareholder wealth. Furthermore, we find evidence of a negative and non-linear relation between CEO total return and long-run shareholder returns.

Suggested Citation

  • Laing, Elaine & Gurdgiev, Constantin & Durand, Robert B. & Boermans, Boris, 2019. "U.S. tax inversions and shareholder wealth effects," International Review of Financial Analysis, Elsevier, vol. 62(C), pages 35-52.
    • Handle: RePEc:eee:finana:v:62:y:2019:i:c:p:35-52
    DOI: 10.1016/j.irfa.2019.01.001
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    More about this item

    Keywords

    Corporate inversions; CEO total returns; Taxation;
    All these keywords.

    JEL classification:

    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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