International taxation and the direction and volume of cross-border M&As

Research output: Contribution to journalArticleScientificpeer-review

Abstract

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%.
Original languageEnglish
Pages (from-to)1217-1249
JournalJournal of Finance
Volume64
Issue number3
Publication statusPublished - 2009

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Cross-border
International taxation
Double taxation
Cross-border mergers and acquisitions
Multinational firms
Income
Subsidiaries
Taxation
Firm location
Proportion

Cite this

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title = "International taxation and the direction and volume of cross-border M&As",
abstract = "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{\%}.",
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International taxation and the direction and volume of cross-border M&As. / Huizinga, H.P.; Voget, J.

In: Journal of Finance, Vol. 64, No. 3, 2009, p. 1217-1249.

Research output: Contribution to journalArticleScientificpeer-review

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AB - 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%.

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