The Impact of IP Box Regimes on the M&A Market

73 Pages Posted: 3 Jan 2019 Last revised: 19 Aug 2021

See all articles by Sebastien Bradley

Sebastien Bradley

Drexel University

Leslie A. Robinson

Dartmouth College - Tuck School of Business; Dartmouth College - Accounting

Martin Ruf

University of Tübingen

Date Written: March 19, 2021


Intellectual property (IP) box regimes reward ownership of successful technology by imposing lower tax rates on income derived from IP relative to other sources of business income. Coupled with explicit provisions regarding the eligibility of acquired IP, IP boxes may affect merger and acquisition (M&A) incentives through multiple channels. Applying panel differences-in-differences, triple-differencing, and event study methods, we examine the effects of these modified incentives on the volume of M&A transactions and acquisition probabilities. In regimes with strict nexus requirements, reduced taxation of IP income is associated with reductions in the number of deals and the probability of being acquired for patent-owning firms due to the potential loss of eligibility for preferential taxation. This effect dissipates where nexus requirements are relaxed, and significant positive effects of IP box tax savings in more permissive regimes point to increased after-tax valuations of merger-driven synergies.

Keywords: IP box, tax policy, acquisition, M&A, innovation, patent

JEL Classification: K34, H25, H32

Suggested Citation

Bradley, Sebastien and Robinson, Leslie and Ruf, Martin, The Impact of IP Box Regimes on the M&A Market (March 19, 2021). Journal of Accounting & Economics (JAE), Forthcoming, Available at SSRN: or

Sebastien Bradley (Contact Author)

Drexel University ( email )

1023 Gerri C. LeBow Hall
3220 Market St
Philadelphia, PA 19104
United States

Leslie Robinson

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States

Dartmouth College - Accounting ( email )

100 Tuck Hall
Hanover, NH 03755
United States
603-646-4018 (Phone)

Martin Ruf

University of Tübingen ( email )

Nauklerstraße 47
Tübingen, D-72076


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