How corporate tax impact decisions in merger and acquisition deals. The phenomenon of "profit shifting"

• Autor(a) principal: Roncalli, Bianca
• Data de Publicação: 2022
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10362/156087
• topic: Mergers and acquisitions; Corporate tax rate; Profit shifting; Consolidated corporate tax base.; Domínio/Área Científica::Ciências Sociais::Economia e Gestão

Using data on mergers and acquisitions, this paper aims at evaluating the impact of corporate tax on the type of M&A deals. The results suggest the existence of a negative relationship between the corporate tax rate charged in the target’s country and the probability of having a merger/acquisition corresponding to 100% of the target company. Suggesting that cross-border deals, where the target’s country is characterized by lower tax rates, may result in profitability gains for the acquiring company. Moreover, benefits and implications of a harmonized corporate tax base are presented as a possibility for hedging against “profit shifting” practices resulting in a reduction of cross-border M&A deals.