International Taxation and Productivity Effects of M&As

51 Pages Posted: 9 Mar 2017 Last revised: 4 Feb 2021

See all articles by Maximilian Todtenhaupt

Maximilian Todtenhaupt

Norwegian School of Economics (NHH)

Johannes Voget

University of Mannheim - Accounting and Taxation

Date Written: May 27, 2020

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 less pronounced when firms can use international profit shifting to attenuate effective differences in taxation.

Keywords: M&A, productivity, international taxation

JEL Classification: F23, G34, H25, D24

Suggested Citation

Todtenhaupt, Maximilian and Voget, Johannes, International Taxation and Productivity Effects of M&As (May 27, 2020). Available at SSRN: https://ssrn.com/abstract=2929291 or http://dx.doi.org/10.2139/ssrn.2929291

Maximilian Todtenhaupt (Contact Author)

Norwegian School of Economics (NHH) ( email )

Helleveien 30
Bergen, NO-5045
Norway

HOME PAGE: http://https://sites.google.com/view/todtenhaupt

Johannes Voget

University of Mannheim - Accounting and Taxation ( email )

Mannheim, 68131
Germany

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