Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/170581
Authors: 
von Hagen, Dominik
Pönnighaus, Fabian Nicolas
Year of Publication: 
2017
Series/Report no.: 
ZEW Discussion Papers 17-040
Abstract: 
We show that corporate taxation systems regarding foreign dividends and capital gains across 49 countries differ in many aspects, contradicting the requirements for capital ownership neutrality and indicating that ownership patterns are distorted. Consequently, a national tax policy maker may ask which taxation system improves the position of its multinational entreprises in bidding for foreign targets. To address this question, we develop a theoretical model on the impact of foreign dividends and capital gains taxation on cross-border M&A prices from the acquirer's perspective and theoretically compare different taxation systems. In a next step, we empirically validate our model in a regression analysis on a large cross-border M&A data set. Based on this analysis, we find that foreign dividends taxation rather than capital gains taxation impacts M&A prices. Finally, we provide tax policy suggestions.
Subjects: 
International taxation
Repatriation taxes
Capital gains taxes
Lock-in effect
Multinational entities
Cross-border M&As
JEL: 
F23
G34
H25
H26
H32
H73
Document Type: 
Working Paper

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