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In recent years some U.S. firms have merged with non-U.S. firms and changed their home country...

In recent years some U.S. firms have merged with non-U.S. firms and changed their home country from the United States to that of their merger partner. In such situations, the U.S. corporate tax rates were higher than those of the other country. Such mergers can be an example of firms trying to control what risk?

Business risk

Financial risk

Purchasing power risk

Tax risk

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Answer #1

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Tax risk - tax risk is the chances of inccuring losses due to higher tax rate.

In this case, US firms merger with other non - US firm, become non- US firm after merger which attract high corporate tax rate which may lead to reduction in Earning after tax hence tax risk arise.

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