Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/235337 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 8967
Publisher: 
Center for Economic Studies and Ifo Institute (CESifo), Munich
Abstract: 
We investigate how changes in firm productivity after M&As are affected by differences in profit taxation between the target and the acquirer. We argue that tax differentials distort the efficient allocation of productive factors following an M&A and thus inhibit the realization of productivity improvements. Using firm-level data on inputs and outputs of production as well as on corporate M&As, we show that the absolute tax differential between the locations of two merging firms reduces the subsequent total factor productivity gain. This effect is concentrated in horizontal M&As and less pronounced when firms can use international profit shifting to attenuate effective differences in taxation.
Subjects: 
M&A
productivity
international taxation
JEL: 
F23
H25
Document Type: 
Working Paper
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