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market valuation of the effect of the tax amortizability of purchased goodwill

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Date Issued:
2002
Summary:
This study investigates the market valuation of the effect of goodwill tax amortization on corporate acquisitions. Specifically, the study tests whether a significant positive change exists in the market reaction to acquisitions qualifying for the Internal Revenue Code section 197. Two methodologies are employed in the examination of the market assessment of the effect of the Internal Revenue Code section 197. First, a market model methodology is utilized in order to pre examine whether the market reacted differently to acquisitions that qualified for goodwill tax deductibility relative to acquisitions that did not. Second, multiple regression models were obtained for testing the study's hypotheses. The results of this study support the hypothesis that a positive change exists in the market reaction to acquisitions that qualify for the internal revenue code 197 relative to those that do not. There are two implications for these findings. First, they imply that acquiring firms did retain some of the tax benefits associated with the change in the tax law. Second, and given the findings of previous studies, the findings of this study also imply that the expected tax savings are actually shared between the acquiring firm and the target's shareholders.
Title: The market valuation of the effect of the tax amortizability of purchased goodwill.
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Name(s): Alshinifi, Saleh H.
Florida Atlantic University, Degree grantor
Hopwood, William S., Thesis advisor
Type of Resource: text
Genre: Electronic Thesis Or Dissertation
Date Issued: 2002
Publisher: Florida Atlantic University
Place of Publication: Boca Raton, Fla.
Physical Form: application/pdf
Extent: 75 p.
Language(s): English
Summary: This study investigates the market valuation of the effect of goodwill tax amortization on corporate acquisitions. Specifically, the study tests whether a significant positive change exists in the market reaction to acquisitions qualifying for the Internal Revenue Code section 197. Two methodologies are employed in the examination of the market assessment of the effect of the Internal Revenue Code section 197. First, a market model methodology is utilized in order to pre examine whether the market reacted differently to acquisitions that qualified for goodwill tax deductibility relative to acquisitions that did not. Second, multiple regression models were obtained for testing the study's hypotheses. The results of this study support the hypothesis that a positive change exists in the market reaction to acquisitions that qualify for the internal revenue code 197 relative to those that do not. There are two implications for these findings. First, they imply that acquiring firms did retain some of the tax benefits associated with the change in the tax law. Second, and given the findings of previous studies, the findings of this study also imply that the expected tax savings are actually shared between the acquiring firm and the target's shareholders.
Identifier: 9780493912950 (isbn), 12020 (digitool), FADT12020 (IID), fau:8935 (fedora)
Collection: FAU Electronic Theses and Dissertations Collection
Note(s): College of Business
Thesis (Ph.D.)--Florida Atlantic University, 2002.
Subject(s): Industrial safety--Law and legislation--United States
Industrial hygiene--Law and legislation--United States
Petroleum products
Held by: Florida Atlantic University Libraries
Persistent Link to This Record: http://purl.flvc.org/fcla/dt/12020
Sublocation: Digital Library
Use and Reproduction: Copyright © is held by the author, with permission granted to Florida Atlantic University to digitize, archive and distribute this item for non-profit research and educational purposes. Any reuse of this item in excess of fair use or other copyright exemptions requires permission of the copyright holder.
Use and Reproduction: http://rightsstatements.org/vocab/InC/1.0/
Host Institution: FAU
Is Part of Series: Florida Atlantic University Digital Library Collections.