26 Pages Posted: 5 Aug 2011 Last revised: 26 Aug 2011
Date Written: January 1, 2011
We study the effect of high quality financial standards and shareholder-level capital gains taxes on the structuring of cross-border mergers and acquisitions. Using 5,837 M&A transaction across a 16-year period, we find that higher shareholder capital gains tax rates lead to increased use of tax-free share-for-share exchanges. Consistent with theory, the role of shareholders’ tax incentives are mitigated by increased information asymmetry in cross-border transactions. However, we find evidence that higher quality financial reporting standards reduce this information asymmetry allowing more tax efficient cross-border transactions.
Suggested Citation: Suggested Citation
Mescall, Devan and MacDonald, Christy, Taxes, Financial Reporting Standards and the Role of Information Asymmetry in the Structuring of Cross-Border Mergers and Acquisitions (January 1, 2011). 2011 American Accounting Association Annual Meeting - Tax Concurrent Sessions. Available at SSRN: https://ssrn.com/abstract=1905216 or http://dx.doi.org/10.2139/ssrn.1905216
By Andrew Gross
Measuring the Impact of Intangible Asset Investment Toward Company Financial Health and Company Agency Problem: Empirical Research from Indonesian Companies During World Economic Financial Crisis 2006-2011