Corporate Income Tax On The Types Of Mergers And Acquisitions Of Listed Companies In China

It is of interest to acquirer, target, security regulator and other related capital market agencies that whether corporate tax affects the corporate acquisition structure. I define transaction structure by tax status, taxable or tax-free, and use marginal tax rate as the proxy for acquiring firm's corporate tax rate.For some difficulty, this paper only investigates the effect of acquiring firm's corporate tax on transaction structure, using transaction structure (taxable or tax-free)as the dependent variable, MTRt, MTRt-1 (marginal tax rate) and NOL(net operatingloss)separately as the explanatory variables after controlling other variables which have effect on transaction structure. The result indicates that acquiring firm's corporate tax has effect on transaction structure. In the two small samples, the average of acquiring firm's total debt ratio , size and marginal tax rate have distinct difference, but the average of growth opportunities , return on asset and the ration of stocks which managers hold have no distinct difference. By the logistic regression, the results indicate that acquiring firm's tax rate is positively related to the transaction structure. The higher marginal tax rate the acquiring firm has, the more probability transaction structure is taxable. The lower marginal tax rate the acquiring firm has, the more probability transaction structure is tax-free. For control variables, acquiring firm's total debt ratio and return on asset is negatively related to transaction structure, but growth opportunities , size and the ratio of stocks which managers hold is positively related to transaction structure. The research indicates that the explanation power of MTR to corporate acquisition structure is 3.2%.