'U.S. Worldwide Taxation and Domestic Mergers and Acquisitions' A Discussion

18 Pages Posted: 3 Feb 2021

See all articles by Novia (Xi) Chen

Novia (Xi) Chen

University of Houston - Department of Accountancy & Taxation

Terry J. Shevlin

University of California-Irvine

Date Written: August 20, 2018

Abstract

Harris and O’Brien (2018) investigate whether U.S. tax policy distorts U.S. multinationals’ (MNCs) investment. They find that MNCs facing higher repatriation tax costs engage in fewer domestic acquisitions. The study re-examines the results in two prior studies that found no effect (Hanlon et al. 2015) and a positive effect (Martin et al. 2015) by introducing a new proxy for repatriation tax costs: A binary variable for whether the MNC uses the Double Irish structure. We critique the theory underlying the prediction as well as the proxy. We conclude that caution should be exercised in taking the results at face value.

Keywords: Repatriation tax costs, M&A, domestic acquisitions

JEL Classification: M42, H21, F23, G34

Suggested Citation

Chen, Novia (Xi) and Shevlin, Terry J., 'U.S. Worldwide Taxation and Domestic Mergers and Acquisitions' A Discussion (August 20, 2018). Journal of Accounting & Economics (JAE), Vol. 66, No. 2-3, 2018, Available at SSRN: https://ssrn.com/abstract=3742137

Novia (Xi) Chen (Contact Author)

University of Houston - Department of Accountancy & Taxation ( email )

Bauer College of Business
4800 Calhoun Road
Houston, TX 77204
United States

Terry J. Shevlin

University of California-Irvine ( email )

Paul Merage School of Business
Irvine, CA California 92697-3125
United States
2065509891 (Phone)

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