The effect of transaction structure on price: Evidence from subsidiary sales

Erickson, Merle; Wang, Shiing‐wu

doi:10.1016/s0165-4101(00)00029-x

Cited by 65 publications

(34 citation statements)

References 16 publications

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“…He shows that the probability that a sale is structured as a "taxable deal," financed with tax-deductible debt, increases with the acquirer's tax rate; however, he finds no evidence that seller tax characteristics affect deal structure. Erickson and Wang (2000) find that the price of subsidiary sales can be affected by tax considerations. These authors show that premiums (and seller abnormal stock returns) increase when the sale is structured to allow a step-up in subsidiary basis, so that the acquiring firm receives additional depreciation tax benefits.…”

Section: Empirical Evidencementioning

confidence: 96%

A Review of Taxes and Corporate Finance

2005

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This paper reviews domestic and multinational corporate tax research. For each topic, the theoretical arguments explaining how taxes can affect corporate decision-making and firm value are reviewed, followed by a summary of the related empirical evidence and a discussion of unresolved issues. Tax research generally supports the hypothesis that high-tax rate firms pursue policies that provide tax benefits. Many issues remain unresolved, however, including understanding whether tax effects are of first-order importance, why firms do not pursue tax benefits more aggressively, and whether corporate actions are affected by investor-level taxes.

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Section: Empirical Evidencementioning

confidence: 96%

A Review of Taxes and Corporate Finance

2005

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“…It may because that the financial risks of unprofitable firms increase debt tax shield effects, then decrease depreciation shield effects and offset the tax savings of acquiring enterprises, resulting in "traps" in tax synergistic effect. [8] Correlation of tax synergy and M&A. According to the results of empirical test, correlation effect in M&A has a significant impact on tax synergy in the third and fourth years on the level of 10%.…”

Section: Empirical Analysesmentioning

confidence: 99%

Evaluation and Analysis on Tax Synergistic Effects in Merger and Acquisition of Chinese Listed Companies

Guo¹

2017

Proceedings of the 2017 3rd International Conference on Economics, Social Science, Arts, Education and Management Engineering (

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Abstract. In this paper, factors include preferential tax, target enterprise's loss, debt tax shield and depreciation shield are all taken into account. Principal component analysis method is used to construct comprehensive scoring functions and evaluate tax synergistic effects of listed companies after mergers and acquisitions. Parametric and nonparametric tests are employed to analyze the influences of enterprise's asset scale, target enterprise's loss, correlation of M&A, mode of payment and related transaction on tax synergistic effects.

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“…In these transactions it is not uncommon for the deal to be structured to include a §338(h)(10) election, resulting in a step-up in the tax basis of the acquired entity's assets (see Erickson and Wang (2000), Ayers, Lefanowitz and Robinson (2000), and Erickson and Wang (2003)). Thus, in acquisitions of subsidiaries and conduit entities, the tax bases of the target's assets are often recorded at fair market value.…”

Section: Merger and Acquisition Valuation Issues -The Inside/outside mentioning

confidence: 99%

Bridging the Reporting Gap: A Proposal for more Informative Reconciling of Book and Tax Income

Plesko

Mills

2003

SSRN Journal

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In this paper we review the history and purpose of the corporation income tax return's Schedule M-1 in light of recent attention to corporate reporting issues. Although the traditional role for the schedule has been to assist the audit process, the reconciliation of book to tax accounting numbers also provides information that is useful to tax analysts. We find the existing tax return Schedule M-1, largely unchanged since its introduction in 1963, provides insufficient detail for complex reconciliation issues. We propose a modified M-1 to achieve better reconciliation, and discuss the advantages, and disadvantages, of public disclosure of such data.We appreciate comments from

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The effect of transaction structure on price: Evidence from subsidiary sales

Cited by 65 publications

References 16 publications

A Review of Taxes and Corporate Finance

A Review of Taxes and Corporate Finance

Evaluation and Analysis on Tax Synergistic Effects in Merger and Acquisition of Chinese Listed Companies

Bridging the Reporting Gap: A Proposal for more Informative Reconciling of Book and Tax Income

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