M&A , business taxation , capital structure , empirical analysis
Abstract:
The deductibility of interest expenses from the corporate tax base creates an incentive
for acquiring companies to finance a takeover with debt. In this paper, I investigate
the impact of profit taxation on the financing decision in corporate acquisitions for the
first time for a sample of different acquirer-countries mainly in Europe. The likelihood
to observe a debt-financed acquisition is found to increase in the acquirer's tax rate. In
addition, I take into account that the financing decisions of particular acquisitions might
not be independent from other investment decisions. Therefore, I analyze the acquirer's
capital structure development around the acquisition and find an increase in the statutory
tax rate by one %-point to be associated with a stronger increase in the debt ratio by
0.55 %-points during the acquisition period.
Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.
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