Do Some Stakeholders in Publicly Traded Firms Benefit at the Expense of Others as a Result of Corporate Inversions?
First Faculty Advisor
Corporate Inversions; Shareholders
All rights retained by Ryan Hitchcock and Bryant University
This report examines corporate inversions to determine whether this practice benefits the majority of stakeholders or merely a select few. A sample of firms previously incorporated in the United States that have since undergone inversions is examined to answer this question. Annual stock price returns, stock price volatility, and earnings per share changes from the sample of inversion firms are the main sources of data examined. These results are compared to the S&P 500 and peer firms to determine whether the changes can be attributed to the inversions, or are merely a result of general economic conditions. Supporting topics addressed in this paper include an overview of legislation related to inversions and suggestions to mitigate the negative consequences of inversions. This study shows that there are no observable benefits to shareholder wealth arising from corporate inversions. While there were changes in the data from pre to post inversion, they were not unique to the inversion firms as the same changes were observed in the peer firms. However, the study showed that there is a fundamental difference between inversion firms when compared to the S&P 500.