Details
| Original language | English |
|---|---|
| Article number | 103438 |
| Journal | Journal of international economics |
| Volume | 131 |
| Early online date | 29 Jan 2021 |
| Publication status | Published - Jul 2021 |
| Externally published | Yes |
Abstract
We investigate how changes in firm productivity after M&As are affected by differences in profit taxation between the target and the acquirer. We argue that tax differentials distort the efficient allocation of productive factors following an M&A and thus inhibit the realization of productivity improvements. Using firm-level data on inputs and outputs of production as well as on corporate M&As, we show that the absolute tax differential between the locations of two merging firms reduces the subsequent total factor productivity gain. This effect is concentrated in horizontal M&As and less pronounced when firms can use international profit shifting to attenuate effective differences in taxation.
Keywords
- International taxation, M&A, Productivity
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)
- Finance
- Economics, Econometrics and Finance(all)
- Economics and Econometrics
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In: Journal of international economics, Vol. 131, 103438, 07.2021.
Research output: Contribution to journal › Article › Research › peer review
}
TY - JOUR
T1 - International taxation and productivity effects of M&As
AU - Todtenhaupt, Maximilian
AU - Voget, Johannes
PY - 2021/7
Y1 - 2021/7
N2 - We investigate how changes in firm productivity after M&As are affected by differences in profit taxation between the target and the acquirer. We argue that tax differentials distort the efficient allocation of productive factors following an M&A and thus inhibit the realization of productivity improvements. Using firm-level data on inputs and outputs of production as well as on corporate M&As, we show that the absolute tax differential between the locations of two merging firms reduces the subsequent total factor productivity gain. This effect is concentrated in horizontal M&As and less pronounced when firms can use international profit shifting to attenuate effective differences in taxation.
AB - We investigate how changes in firm productivity after M&As are affected by differences in profit taxation between the target and the acquirer. We argue that tax differentials distort the efficient allocation of productive factors following an M&A and thus inhibit the realization of productivity improvements. Using firm-level data on inputs and outputs of production as well as on corporate M&As, we show that the absolute tax differential between the locations of two merging firms reduces the subsequent total factor productivity gain. This effect is concentrated in horizontal M&As and less pronounced when firms can use international profit shifting to attenuate effective differences in taxation.
KW - International taxation
KW - M&A
KW - Productivity
UR - http://www.scopus.com/inward/record.url?scp=85102881195&partnerID=8YFLogxK
U2 - 10.1016/j.jinteco.2021.103438
DO - 10.1016/j.jinteco.2021.103438
M3 - Article
AN - SCOPUS:85102881195
VL - 131
JO - Journal of international economics
JF - Journal of international economics
SN - 0022-1996
M1 - 103438
ER -