Business Commons^™

Value Relevance Of Deferred Taxes In Mergers And Acquisitions, Wei-Chih Chiang

Doctoral Dissertations

The major concern in a mergers and acquisitions (M&A) transaction is how to determine the economic benefits and burdens and allocate them among the participating firms. Part of this concern can be described as the question of how the participating firms ascertain and price the potential tax benefits of the target's tax attributes.

Different from prior research, which focuses on the reaction of the market, this study emphasizes the viewpoint of the participating firms in pricing the target firms' deferred taxes when determining the acquisition price. The results indicate that the participating firms assign value to the target firms' deferred …