Abstract
The authors present evidence that changes in tax laws passed in the 1980s had a first-order effect on merger and acquisition activity in the United States. They also present evidence of increased reliance on certain institutional arrangements (unit-management buyouts and going-private transactions) that were destined to reduce the nontax costs of reorganization. Their model predicts and their evidence confirms that while the Tax Reform Act of 1986 discouraged transactions among U.S. corporations, it increased the demand for merger and acquisition transactions between U.S. sellers and foreign buyers. Copyright 1990 by the University of Chicago.
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