M&A and the Tax Benefits of Debt Financing

Uwe Scheuering

VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order from Verein für Socialpolitik / German Economic Association

Abstract: I analyze the e ffects of profi t taxation on the fi nancing decision of corporate acquisitions. The deductibility of interest expenses from the corporate tax base creates an incentive for acquiring companies to fi nance a takeover with debt. Regarding the particular decision how to finance the considered deals results are not robust but looking at the whole capital structure development of acquirers I fi nd that an increase of the statutory tax rate by one %-point is associated with an increase of the debt ratio by 0.57 %-points during the acquisition period.

JEL-codes: G34 H25 H32 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-acc and nep-pub
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Working Paper: M&A and the tax benefits of debt-financing (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc13:79817

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