Merger Waves and Corporate Inversions: Causes and Consequences

A number of reports from the business press have suggested that corporate cash hoarding may have served as the motivation for the recent rise in inversions. While access to cash may motivate some inversions, it is difficult to differentiate the importance of corporate cash availability from other influences such as business environment shocks or relative equity valuations. Regardless of the specific motivation, inversion transactions have garnered the attention of the public, the media and the government. This recent spike in scrutiny carries with it the possibility that some action may be taken to at least partially eliminate any potential tax benefits of an inversion, suggesting that firms considering such a move might be wise to move quickly. (C) 2015 Wiley Periodicals, Inc.