Recent News & Media
A Few Companies Could Bear Brunt of New Minimum Tax
September 26, 2022Research by the UNC Tax Center shows just six publicly traded U.S. companies, including Amazon and Warren Buffett’s Berkshire Hathaway Inc., would have paid half the estimated $32 billion in revenue generated by a 15% corporate minimum tax signed into law last month. More
CbC Reporting
What do we know about CbC Reporting?
January 31, 2021In 2015, to address the lack of data and transparency on corporate taxation and firm tax avoidance strategies, the Organization for Economic Co-operation and Development (OECD) released the Base Erosion and Profit Shifting (BEPS) Action 13 Report which established the annual Country-by-Country Reporting (CbCR) guidelines for multinational enterprises (MNEs). More
TCJA Effects Tracker
The Investors’ Assessment of Cross-Border M&A – Repatriation Taxes, Agency Conflicts and the TCJA
June 30, 2022This paper analyzes stock market reactions to announcements of cross-border M&A deals before and after the ‘Tax Cuts and Jobs Act of 2017’ (TCJA). Prior literature established that the repatriation tax system resulted in agency conflicts and correspondingly low announcement returns due to excess cross-border acquisitions. The TCJA abolished the repatriation tax. Therefore, M&A decisions by the managers might more closely align with the investors’ perspective post TCJA. Correspondingly, announcement returns could become more positive. However, if managers continue to pursue excess cross-border acquisitions, investors might be particularly dissatisfied because of the alternative option of tax-exempt repatriation post TCJA. In line with excess M&A acquisitions post TCJA, I present evidence that abnormal returns to cross-border M&A announcements by U.S. firms are significantly lower in the period after the TCJA. The effects are concentrated in U.S. acquirers most affected by the repatriation tax prior to the TCJA, in cross-industry deals, and in acquisitions by firms with low leverage and low payout ratios. Overall, my findings suggest that the negative perception of cross-border M&A is driven by agency conflicts not solved by the TCJA. More