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May 14, 2026Journal of the American Taxation Association

Taxes, Mergers, and the Value of Limited Liability Protection: Evidence from Parent-Subsidiary Mergers in Korea

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Authors

JLJiyoon Lee

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Overview

Examines the impact of taxation on parent-subsidiary mergers in Korea, suggesting tax motivations influence merger outcomes.

Key Points

  • The aim is to investigate how taxation affects the financial outcomes of parent-subsidiary mergers in Korea.
  • Examined parent-subsidiary mergers involving no cash transfers or ownership changes.
  • Analyzed merger announcement returns associated with tax savings.
  • Focused on mergers between profitable and loss-making firms.
  • Merger announcement returns are positively linked to estimated tax savings.
  • Returns are lower for loss-making subsidiaries lacking a parent debt guarantee.
  • Positive returns may still indicate potential future tax benefits despite ongoing subsidiary losses.

Cite This Study

Jiyoon Lee (2026) studied this question.

synapsesocial.com/papers/6a0567d2a550a87e60a200c2https://doi.org/10.2308/jata-2023-001
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