Corporate Mergers and Acquisitions
Morgan, NationsBank- Bank of Americaâ€¦ regarded as the impressed deals in M&A history. However, there are still some arguments that suspect the benefits of M&A and emphasize too many firms which could not reach to the intended results. Therefore, I think that we should consider the benefits of M&A carefully and help companies be confident when they conduct M&A deals. Particularly, I write this essay to study more specifically what companies receive in M&A cases.
This gives them ready platform on which they can further build their operations. Tax shield is one another aspect of consideration. Tax shields play an important role. Firms in distress have accumulating past losses and unclaimed depreciation benefits on their books. A profit making taxpaying firm can derive benefit from these tax shields. They can reduce or eliminate their tax liability by benefiting from a merger of these firms. In some countries, tax laws do not permit passing of such tax shields to the acquiring firm except under specific circumstances (DePamphilis, 2009).
Collectively, our evidences suggest that corporate political ideology have an impact on the probability of completing deals and in determining announcement returns, supporting “Cultural distance hypothesis”.
Andrade, G., Mark M. and Erik S. (2001). “New Evidence and Perspectives on Mergers.” Journal of Economic Perspectives 15, no. 2 (2001): 103–120.
DePamphilis, D., (2009). Mergers, Acquisitions, and Other Restructuring Activities: An Integrated Approach to Process, Tools, Cases, and Solutions. London: Academic Press.
Frankel, M. (2005). Mergers and acquisitions basics: the key steps of acquisitions, divestitures, and investments. San Francisco: John Wiley and Sons.
Gugler, K., Mueller, D., Yurtoglu, B. & Zulehner, C. (2003). “The effects of mergers: an international comparison.” International Journal of Industrial Organization 21, no. 2003 (2003): 625-653.
Hunt, P. (2009). Structuring Mergers & Acquisitions: A Guide to Creating Shareholder Value. New York: Aspen Publishers Online.