<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>The paper examines what happened to the profitability of foreign-acquired firms following acquisition in Norway in the period 1994–2005. Propensity score matching combined with a difference-in-difference estimator is used to show that the profitability of the firms acquired goes down significantly following the acquisition. Cost elements, driving the lower profitability of the foreign-acquired firms, are the elements that could reflect transfer price manipulations. Furthermore, the results indicate that despite deteriorating financial performance, there is no significant change in the operating efficiency, liquidity, or solvency of the acquired firms. This may indicate that the observed changes in profitability can be explained by profit shifting activities of the acquired firms.</p>
</abstract>

The paper examines what happened to the profitability of foreign-acquired firms following acquisition in Norway in the period 1994–2005. Propensity score matching combined with a difference-in-difference estimator is used to show that the profitability of the firms acquired goes down significantly following the acquisition. Cost elements, driving the lower profitability of the foreign-acquired firms, are the elements that could reflect transfer price manipulations. Furthermore, the results indicate that despite deteriorating financial performance, there is no significant change in the operating efficiency, liquidity, or solvency of the acquired firms. This may indicate that the observed changes in profitability can be explained by profit shifting activities of the acquired firms.

Firm performance following foreign acquisitions in Norway: Evidence of profit shifting?<xref ref-type="fn" rid="j_ntaxj-2023-0001_fn_010">**</xref>

Nordic Tax Journal

This work is licensed under the Creative Commons Attribution 4.0 International License.

Firm performance following foreign acquisitions in Norway: Evidence of profit shifting?

The paper examines what happened to the profitability of foreign-acquired firms following acquisition in Norway in the period 1994–2005. Propensity score...

Firm performance following foreign acquisitions in Norway: Evidence of profit shifting?**

Article Category: Article

Data publikacji: 22 kwi 2024

Zakres stron: 1 - 21

Otrzymano: 18 maj 2020

Przyjęty: 26 wrz 2022

DOI: https://doi.org/10.2478/ntaxj-2023-0001

Słowa kluczowe
Profit shifting, transfer pricing, multinational companies, propensity score matching

© 2023 J. Tropina Bakke, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Firm performance following foreign acquisitions in Norway: Evidence of profit shifting?**

Article Category: Article

Data publikacji: 22 kwi 2024

Zakres stron: 1 - 21

Otrzymano: 18 maj 2020

Przyjęty: 26 wrz 2022

DOI: https://doi.org/10.2478/ntaxj-2023-0001

Słowa kluczoweProfit shifting, transfer pricing, multinational companies, propensity score matching

© 2023 J. Tropina Bakke, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Słowa kluczowe
Profit shifting, transfer pricing, multinational companies, propensity score matching