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The Effects of the U.S. Tax Reform on Investments in Low-Tax Jurisdictions—Evidence from Cross-Border M&As

Mathias Dunker et al.

Journal of the American Taxation Association2025https://doi.org/10.2308/jata-2021-029article
AJG 3ABDC A
Weight
0.37

Abstract

This paper examines the effects of the 2017 U.S. tax reform, commonly known as the “Tax Cuts and Jobs Act” (TCJA) on cross-border M&As of U.S. acquirers. The TCJA replaced the U.S. worldwide tax system by a territorial system, albeit with one important exception: the “Global Intangible Low-Taxed Income” (GILTI) provision. We utilize a difference-in-differences type design and compare cross-border M&A patterns of U.S. acquirers with acquirers outside the U.S. before and after the TCJA. Our results suggest that the outbound acquisition pattern changed significantly for those U.S. acquirers likely affected by the new GILTI provision. GILTI-affected firms acquire targets in low-tax countries and tax havens significantly less often after the TCJA. Furthermore, post-TCJA, GILTI-affected U.S. firms acquire targets that are less profitable and have lower excess returns. JEL Classifications: G34; H26; H32.

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https://doi.org/https://doi.org/10.2308/jata-2021-029

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@article{mathias2025,
  title        = {{The Effects of the U.S. Tax Reform on Investments in Low-Tax Jurisdictions—Evidence from Cross-Border M&As}},
  author       = {Mathias Dunker et al.},
  journal      = {Journal of the American Taxation Association},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.2308/jata-2021-029},
}

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Evidence weight

0.37

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.16 × 0.4 = 0.06
M · momentum0.53 × 0.15 = 0.08
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.