Although taxes have been indicated as a motive behind mergers, to date there has been limited research analyzing specifically the source of the purported tax motive to merger and the value of tax attributes in mergers. The purpose of this dissertation is twofold: (1) to analyze merger-related tax provisions in place for the sample time period and develop a model of the value of tax characteristics in mergers; and (2) to provide empirical evidence on the value of tax attributes. The empirical examination focuses on whether certain tax attributes influence the tax status chosen for a merger and whether takeover gains are associated with tax attributes. / Results indicate limited support for tax status being affected by tax attributes. Only proxies of potential step-up of the acquired firm's assets and depreciation recapture are significant in determining the tax status of the merger. In examination of the relation between tax attributes and takeover gains, results suggest that acquired firms gain by enabling the use of otherwise unusable tax credits carryovers and gain when the undervaluation of acquired assets outweighs depreciation recapture tax liability. Also, acquiring firms forego takeover gains when valuable net operating loss carryovers are acquired. In analyzing the division of takeover gains between the merger partners, it is shown that acquired firm shareholders earn 97% of the total gain. This division of gains is only affected by the variable for inventory recapture, which seems to proxy for another factor, perhaps management efficiency. / On balance, the evidence suggests that corporate tax characteristics have a significant influence on a minority of mergers. This result suggests that the tax legislative concern of mergers arranged to avoid taxes may be overstated. Nontax considerations appear to be the overriding influence on tax status chosen for a merger, takeover gains, and the division of takeover gains. / Source: Dissertation Abstracts International, Volume: 50-05, Section: A, page: 1394. / Major Professor: Pamela P. Peterson. / Thesis (Ph.D.)--The Florida State University, 1989.
| Identifer | oai:union.ndltd.org:fsu.edu/oai:fsu.digital.flvc.org:fsu_78006 |
| Contributors | Sullivan, Michael John., Florida State University |
| Source Sets | Florida State University |
| Language | English |
| Detected Language | English |
| Type | Text |
| Format | 187 p. |
| Rights | On campus use only. |
| Relation | Dissertation Abstracts International |
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