Taxes and the Merger Decision: An Empirical Analysis / Alan J. Auerbach, David Reishus.

Format:

Book

Author/Creator:

Auerbach, Alan J.

Contributor:

National Bureau of Economic Research.

Reishus, David.

Series:

Working Paper Series (National Bureau of Economic Research) no. w1855.

NBER working paper series no. w1855

Language:

English

Subjects (All):

Corporations--Taxation.

Corporations.

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Taxes and the Merger Decision

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1986.

Cambridge, Mass. : National Bureau of Economic Research, 1986.

Summary:

One motive that is often cited for merger activity is the avoidance of federal income taxes by corporations and their shareholders. Yet there is little empirical evidence on the tax consequences of merger activity, or on the postmerger effects on firm policies of tax motivated mergers. In this paper, we present some initial results based on a large sample of mergers and acquisitions that occurred over the period 1968-83. We find that, in about one fifth of all mergers, there was a potential gain from the transfer of unused tax losses and credits, with an average value of approximately ten percent of the acquired company's market value. Other tax incentives to merge are also measured, but found to be less important quantitatively.

Notes:

Print version record

March 1986.