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.

Acquisitions and mergers, Corporate reorganizations

---

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.

Laws, regulations and rules, Valuation

---

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.

Management science, Models, Property taxes, Property tax, Game theory, Lease or buy decisions

Similar abstracts:

• Abstracts: Effects of ownership structure and control on corporate productivity. CEO tenure as a determinant of CEO pay
• Abstracts: The effect of ex ante earnings uncertainty on earnings response coefficients. The incremental information in SFAS No. 33 income disclosures over historical cost income and its cash and accrual components
• Abstracts: Merger strategies and capital market risk. Stockholder reactions to CEO changes in large corporations. Diversification, systematic risk, and shareholder return: a capital market extension of Rumelt's 1974 study
• Abstracts: General Dynamics takes biggest charge in its history, posts $530.1 million loss. Compulink tries to convert skeptics to paperless office; to get technology accepted, firm lowers actual and perceived risks
• Abstracts: Raychem plans to take a charge for its 3rd period. Businessland to report loss for 3rd period. Tandem says net in quarter was below expectation

This website is not affiliated with document authors or copyright owners. This page is provided for informational purposes only. Unintentional errors are possible.