Jake Smith, 
PhD Candidate

Naveen Jindal School of Management | Finance
University of Texas at Dallas

I'm a Finance PhD candidate at the University of Texas at Dallas. My research focuses on empirical corporate finance.

I received a Bachelor of Science in Finance summa cum laude from the University of South Florida Sarasota-Manatee in 2013, and was awarded the distinction of Outstanding Senior in Finance. I then received a Master of Science in Finance from the University of South Florida in 2015.

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CV | Email | Google Scholar | SSRN

Tax Avoidance through Cross-Border Mergers and Acquisitions

with Jean-Marie Meier

Abstract

We investigate 13,307 cross-border, tax-haven mergers and acquisitions (M&A) from 1990 to 2017, totaling $4.1 trillion in deal value, or about 30% of total cross-border M&A volume. $2.4 of the $4.1 trillion is beyond what is predicted based on a gravity model with economic fundamentals. Tax-haven M&A result in $31.6 billion in recurring annual tax avoidance. To illustrate the magnitude, for a US firm with no prior cross- border M&A history, buying an Irish firm worth 5% of its total assets would result in an expected decline in its effective tax rate of 3.56 percentage points. For identification, we use a change in US tax law in 2004. Following haven acquisitions, firms are more likely to relocate their headquarters to havens. Our results document that tax avoidance through havens is a significant determinant of cross-border M&A.

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Conference Presentations

• 2022 ZEW Public Finance Conference, Mannheim

• Paris December 2021 Finance Meeting, online

• 2021 FOM Conference, Hanover

• 7th IWH-FIN-FIRE Workshop on "Challenges to Financial Stability," Halle (Saale)

• China International Conference in Finance 2021, Shanghai

• SFS Cavalcade 2021, online

• Midwest Finance Association 2021, online

• Journal of Law, Finance, and Accounting 2020, online

• European Economic Association 2020, online

• 10th EIASM Conference on Current Research in Taxation, online

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Poster Session

• American Economic Association 2021, online

Improving the Measurement of Tax Residence: Implications for Research on Corporate Taxation

with Jean-Marie Meier

Abstract

We highlight an opportunity for improved measurement of a key data item in corporate tax research; a firm’s tax residence or “tax citizenship.” Some countries define tax residence based on a firm’s location of incorporation, some on a firm’s location of headquarters, and some consider both locations. Because no data source exists that provides information on firms’ tax residence, studies typically apply a uniform assignment of either the location of incorporation, headquarters, or center of business activity. We use a novel algorithm that embeds the residency laws of 150 countries to accurately assign tax residence. We reassign the tax residence of a considerable fraction of firms relative to standard proxies, and provide evidence that reassignment significantly affects inferences. For instance, for cross-border mergers and acquisitions with a US acquiror, 16% of the deal value involves an acquiror that is reassigned. Moreover, reassigned firms are systematically different from other firms along several dimensions, including effective tax rates.

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Conference Presentations

• 12th EIASM Conference on Current Research in Taxation, online (scheduled)

• 2022 Financial Markets and Corporate Governance Conference, online

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Research Grant

• International Tax Policy Forum

The COVID-19 Bailouts

with Jean-Marie Meier

Published as a pre-print in Covid Economics, Issue 83, 2 July 2021.

Abstract

We use hand-collected data to investigate the COVID-19 bailouts for all publicly listed US firms. The median tax rate is 4% for bailout firms and 16% for no-bailout firms. The bailouts are expensive when compared to past corporate income tax payments of the bailout firms. We compute the number of years a bailout recipient has to pay corporate income tax to generate as much tax revenue as it received in bailouts: 135.0 years for the Paycheck Protection Program and 267.9 years for the airline bailouts. We also document a dark side of the bailouts. For many firms, the bailouts appear to be a windfall. Numerous bailout recipients made risky financial decisions, so bailing them out might induce moral hazard. Moreover, lobbying expenditures positively predict bailout likelihood and amount.

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Poster Session

• American Economic Association 2022, online