The effect of changes in tax laws on corporate reorganization activity
Article Abstract:
Evidence suggests that alterations in tax laws in the 1980s, specifically the Tax Reform Act of 1986, had an effect of the first-order on merger and acquisition (M&A) activity. Evidence indicates that the increased dependence on management buyouts and going private transactions was a consequence of tax planning strategies that sought to mediate the nontax costs of transactions and allowed firms involved in M&A to realize more tax benefits than would have been possible before. A model is proposed and tested which focuses on the effect changes in US tax laws had on M&As of US firms by foreign firms. Research results indicate that the 1986 Tax Reform Act increased the demand for M&As between foreign buyers and US sellers while discouraging transactions between US firms.
Publication Name: The Journal of Business
Subject: Business, general
ISSN: 0021-9398
Year: 1990
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The aggregate and distributional effects of the Tax Reform Act of 1986 on firm valuation
Article Abstract:
The effect of the Tax Reform Act of 1986 on valuation of equities of publicly traded companies is related to projected added tax collection value. The equity values are also related to the indirect economic impact of the tax law. Implementation of the tax law had immediate effects on the price of stocks. A cross-sectional analysis is conducted to gauge the differential effects of the law on the equity values of corporations. A company's abnormal return during the period with related news on the tax law is correlated with possible determining factors of the return. This distributional impact model of the tax law fares well in assessing the effects of the law on individual companies.
Publication Name: The Journal of Business
Subject: Business, general
ISSN: 0021-9398
Year: 1991
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Tax, incentive, and risk-sharing issues in the allocation of property rights: the generalized lease-or-buy problem
Article Abstract:
The problem of allocating an asset's property rights is discussed. The problem is approached by examining risk-sharing motives, moral hazards of incentive problems, and tax considerations involved in allocating property rights. The equilibrium shared ownership arrangement is characterized by a game theory framework. In the case of real estate investments, local housing price indices can be used to improve the efficiency of shared home-ownership contracts, and taxes encourage investors to bear risks, which can reduce asset maintenance.
Publication Name: The Journal of Business
Subject: Business, general
ISSN: 0021-9398
Year: 1985
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