Banks’ Role in Shaping Borrowers’ Tax Policies: Evidence from Bank Mergers and Acquisitions


Student thesis: Doctoral Thesis

View graph of relations


Related Research Unit(s)


Awarding Institution
Award date17 Jul 2017


My dissertation exploits banks’ mergers and acquisitions (M&As) that exogenously induce the forming of new bank-client relationships to identify banks’ influence on corporate tax avoidance. Using the average tax-avoidance level of the bidder bank’s pre-M&A clients in a specific industry as a benchmark, I find that the tax-avoidance levels of new clients transferred from the target bank begin to co-move with this benchmark after the target bank is acquired by the bidder bank. Specifically, I observe a strong and positive correlation between the tax-avoidance levels of the target bank’s borrowers and the bidder bank’s benchmark in the post-M&A period, but not in the pre-M&A period. Further analyses reveal a more pronounced co-movement between the bidder bank’s benchmark and the tax-avoidance levels of the target bank’s borrowers in the post-M&A period when the bidder bank has stronger bargaining power over its clients. My findings suggest that banks have different preferences over client tax avoidance and that they constrain/encourage their clients to conform to their preference levels.

    Research areas

  • bank M&As, corporate tax avoidance, relationship banking