Corporate Tax Cuts, Merger Activity, and Shareholder Wealth
Blouin, J., Fich, E. M., Rice, E. & Tran, A. 
ORCID: 0000-0001-7090-8063 (2021).
Corporate Tax Cuts, Merger Activity, and Shareholder Wealth.
Journal of Accounting and Economics, 71(1),
article number 101315.
doi: 10.1016/j.jacceco.2020.101315
Abstract
We study the impact of the Domestic Production Activities Deduction (DPAD) on mergers and acquisitions. DPAD reduces corporate tax rates on income from work or goods made in the US. Results indicate that the quantity and quality of acquisition bids by DPAD-advantaged firms conform to the predictions of the neoclassical theory of the firm and the theory of financial constraints. Specifically, bids, particularly those cash-financed, increase substantially in industries with large DPAD-related tax cuts and for firms with financial constraints. Moreover, DPAD improves acquisition quality where acquirers and targets are likely to generate incremental DPAD tax benefits through their merger.
| Publication Type: | Article |
|---|---|
| Additional Information: | © 2020. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/ |
| Publisher Keywords: | Corporate Tax Deduction; Acquisitions; Firm Performance; Financial Constraints |
| Subjects: | H Social Sciences > HG Finance |
| Departments: | Bayes Business School > Finance |
| SWORD Depositor: |
Available under License Creative Commons Attribution Non-commercial No Derivatives.
Download (570kB) | Preview
Export
Downloads
Downloads per month over past year
Metadata
MetadataActions (login required)
Admin Login