Taxation of shareholder capital gains and the choice of payment method in takeovers

Bugeja, M; Da Silva Rosa, R

Taxation of shareholder capital gains and the choice of payment method in takeovers

Bugeja, M

Da Silva Rosa, R

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Publication Type:: Journal Article
Citation:: Accounting and Business Research, 2008, 38 (4), pp. 331 - 350
Issue Date:: 2008-01-01

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Field	Value	Language
dc.contributor.author	Bugeja, M https://orcid.org/0000-0002-1941-5092	en_US
dc.contributor.author	Da Silva Rosa, R	en_US
dc.date.issued	2008-01-01	en_US
dc.identifier.citation	Accounting and Business Research, 2008, 38 (4), pp. 331 - 350	en_US
dc.identifier.issn	0001-4788	en_US
dc.identifier.uri	http://hdl.handle.net/10453/12887
dc.description.abstract	From December 1999, shareholders who disposed of shares in Australian takeovers in exchange for scrip could elect to defer capital gains taxation until the disposal of the shares received. We investigate payment method choice by acquiring firms before and after this regulatory change to assess whether target shareholder capital gains tax liabilities became an important factor considered in choosing the form of payment. The results show that, subsequent to the regulatory change, there is a significantly higher probability that equity will be offered as consideration where target shareholder capital gains are greater. This finding confirms the importance of share-holder level taxation in explaining corporate acquisition structure and adds to previous European and US evidence on factors associated with payment method choice in takeovers.	en_US
dc.relation.ispartof	Accounting and Business Research	en_US
dc.relation.isbasedon	10.1080/00014788.2008.9663345	en_US
dc.subject.classification	Accounting	en_US
dc.title	Taxation of shareholder capital gains and the choice of payment method in takeovers	en_US
dc.type	Journal Article
utslib.citation.volume	4	en_US
utslib.citation.volume	38	en_US
utslib.for	150102 Auditing and Accountability	en_US
utslib.for	150103 Financial Accounting	en_US
utslib.for	1501 Accounting, Auditing and Accountability	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Accounting Discipline
utslib.copyright.status	closed_access
pubs.issue	4	en_US
pubs.publication-status	Published	en_US
pubs.volume	38	en_US

Abstract:

From December 1999, shareholders who disposed of shares in Australian takeovers in exchange for scrip could elect to defer capital gains taxation until the disposal of the shares received. We investigate payment method choice by acquiring firms before and after this regulatory change to assess whether target shareholder capital gains tax liabilities became an important factor considered in choosing the form of payment. The results show that, subsequent to the regulatory change, there is a significantly higher probability that equity will be offered as consideration where target shareholder capital gains are greater. This finding confirms the importance of share-holder level taxation in explaining corporate acquisition structure and adds to previous European and US evidence on factors associated with payment method choice in takeovers.

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10453/12887