U.S. Tax Inversions and Shareholder Wealth Effects
40 Pages Posted: 25 Feb 2019
Date Written: February 9, 2019
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: Suggested Citation