U.S. Tax Inversions and Shareholder Wealth Effects

40 Pages Posted: 25 Feb 2019

See all articles by Elaine Laing

Elaine Laing

Trinity Business School

Constantin Gurdgiev

Trinity College, Dublin; Middlebury Institute of International Studies at Monterey (MIIS)

Robert B. B. Durand

Curtin University of Technology - School of Economics and Finance - Department of Finance and Banking

Boris Boermans

affiliation not provided to SSRN

Date Written: February 9, 2019

Abstract

We examine a sample of corporate inversions from 1993 to 2015 by firms active in the U.S. markets and find that shareholders experience positive abnormal returns in the short-run. In the long-run, inversions have a deleterious effect on shareholder wealth. The form of the inversion and country-pair differences in geographic distance, economic development and corporate governance standards are determinants of shareholder wealth. Furthermore, we find evidence of a negative and non-linear relation between CEO total return and long-run shareholder returns.

Keywords: Corporate Inversions, CEO Returns, Total Returns, Taxation

JEL Classification: G02, G43

Suggested Citation

Laing, Elaine and Gurdgiev, Constantin and Durand, Robert B. B. and Boermans, Boris, U.S. Tax Inversions and Shareholder Wealth Effects (February 9, 2019). International Review of Financial Analysis, Vol. 62, 2019, 35-52. Available at SSRN: https://ssrn.com/abstract=3331389

Elaine Laing

Trinity Business School ( email )

Trinity College Dublin
Dublin, 2
Ireland

Constantin Gurdgiev (Contact Author)

Trinity College, Dublin ( email )

Trinity College
Dublin 2

Middlebury Institute of International Studies at Monterey (MIIS) ( email )

460 Pierce St
Monterey, CA 93940
United States

Robert B. B. Durand

Curtin University of Technology - School of Economics and Finance - Department of Finance and Banking ( email )

Bentley 6102 WA
Australia

HOME PAGE: http://tiny.cc/y85rh

Boris Boermans

affiliation not provided to SSRN

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