About

Merle Erickson is a Professor of Accounting at the University of Chicago Booth School of Business. His research focuses on the effect of taxes on business decisions, including the pricing and structuring of mergers, acquisitions, and divestitures, as well as the use of accounting information in valuation and contracting. He studies various aspects of accounting fraud and has published numerous articles in top academic journals. Erickson is a coauthor of the widely used textbook 'Taxes and Business Strategy' and the author/editor of the casebook 'Cases in Tax Strategy.' He has served as a co-editor of the Journal of Accounting Research and has consulted on complex GAAP and tax accounting issues for a diverse range of clients, including the U.S. Department of Justice, the IRS, Fortune 500 companies, international financial institutions, law firms, and accounting firms. His practical experience includes assisting corporations with SEC, IRS, and whistleblower investigations. Erickson brings these real-world experiences into his teaching at Booth, where he has taught courses such as 'Taxes and Business Strategy' for over twenty-five years. He has also taught executive courses for organizations like Morgan Stanley, Merrill Lynch, and General Electric Capital. Erickson earned his bachelor's degree in accounting from Rockhurst College, an MBA from Arizona State University, and a PhD in accounting from the University of Arizona. He joined the Chicago Booth faculty in 1996. In addition to his scholarly activities, he is an avid fisherman and received the Angler Award from the Billfish Foundation in 2003 for catching and releasing the most striped marlin worldwide that year.

Research topics

• Business
• Monetary economics
• Economics
• Financial economics
• Finance

Selected publications

• The Effect of Acquirer Net Operating Losses on Acquisition Premiums and Acquirer Abnormal Returns

  Journal of the American Taxation Association · 2019-02-01 · 7 citations

  article1st authorCorresponding

  ABSTRACT This study examines whether acquirer NOL-related tax benefits generated in an acquisition are shared with the target. For a sample of 1,959 acquisitions, we find that acquisitions of profitable targets by acquirers with NOLs are associated with higher acquisition premiums than acquisitions by non-NOL acquirers. This result indicates that potential post-acquisition tax benefits from use of acquirer NOLs are shared with the target in the form of higher transaction prices. We also find that the acquirer's merger announcement stock price response is positively associated with these tax benefits, which is consistent with the conclusion that acquirers retain part of these potential tax benefits.

  PublisherDOI

• Tax-Motivated Loss Shifting

  The Accounting Review · 2013-04-01 · 61 citations

  article1st authorCorresponding

  ABSTRACT: This paper examines the implications of tax loss carryback incentives for corporate reporting decisions and capital market behavior. During the 1981 through 2010 sample period, we find that firms increase losses in order to claim a cash refund of recent tax payments before the option to do so expires, and we estimate that firms with tax refund-based incentives accelerate about $64.7 billion in losses. Tax-motivated loss shifting is reflected in both recurring and nonrecurring items and is more evident for financially constrained firms. Analysts do not generally incorporate tax-motivated loss shifting into their earnings forecasts, resulting in more negative analyst forecast errors for firms with tax-based incentives than for firms without. Holding earnings surprises constant, however, investors react less negatively to losses reported by firms with tax loss carryback incentives. Data Availability: Data are available from sources identified in the paper.

  PublisherDOI

• The change in information uncertainty and acquirer wealth losses

  Review of Accounting Studies · 2012-02-13 · 17 citations

  articleOpen access1st authorCorresponding
  PublisherOA PDFDOI

• Tax Treatment of Damages Awards

  2012-01-02

  other1st authorCorresponding
  PublisherDOI

• Information Uncertainty and Acquirer Wealth Losses

  SSRN Electronic Journal · 2011-01-01 · 1 citations

  articleOpen access1st authorCorresponding
  PublisherDOI

• Accounting fraud and the market for corporate control

  2011-01-01 · 2 citations

  article1st authorCorresponding

  We analyze the acquisition behavior of a sample of 155 firms accused of committing accounting fraud by the SEC during the period 1985 through 2003. Acquisitions can potentially conceal fraudulent misreporting by managers in various ways. During the period leading up to and including the fraud, these firms purchase over 550 targets valued at nearly $650 billion in the aggregate. We find that firms allegedly engaged in fraud are more likely than non-fraud firms to acquire another company. They are also more likely to purchase foreign firms, subsidiaries, and firms in different industries. During this period, fraud firms are more likely to use termination fee contracts and collared stock offers, and complete acquisitions more rapidly than non-fraud firms. There is no evidence that fraud firms pay significantly higher premiums; however shareholders react more negatively to relatively large acquisitions by fraud firms. Acquisitions are also associated with delayed market recognition of the fraud; the average positive stock returns leading up to the fraud take longer to reverse for firms engaging in acquisitions. Overall, these results suggest that firms engaged in fraud use acquisitions as an ex ante attempt to conceal accounting fraud.

  Publisher

• NOL Poison Pills: Selectica v. Versata

  SSRN Electronic Journal · 2010-06-23 · 5 citations

  articleOpen access1st authorCorresponding

  In late 2008 Selectica’s net operating loss poison pill was triggered by Trilogy/Versata. Litigation ensued in Delaware Court of Chancery over the propriety of the poison pill, which Selectica instituted to protect its $167 million of NOLs from the limitations of Internal Revene Code (I.R.C.) Section 382. Ultimately, the court ruled that Selectica’s board acted reasonably in adopting an NOL poison pill to protect its NOLs. Many other firms have instituted NOL poison pills in the last several years. We discuss NOL poison pills and the Selectica case in this article. We also discuss the treatment of NOLs as a corporate asset, I.R.C. Section 382-related threats to that asset’s value, and the steps firms have taken to protect their NOL assets, including NOL poison pills (also known as Section 382 rights plans). We also provide data regarding other firms that have announced NOL pills in recent years. In doing so, we discuss the valuation of NOLs, GAAP accounting for NOLs, and how the Delaware Court of Chancery considered those issues in reaching its conclusions.

  Publisher

• Taxes and the backdating of stock option exercise dates

  Journal of Accounting and Economics · 2008-10-14 · 57 citations

  article
  PublisherDOI

• Taxes and the Backdating of Stock Option Exercise Dates

  SSRN Electronic Journal · 2008-01-01 · 27 citations

  articleOpen access
  PublisherDOI

• Editorial Note: The 40th Anniversary of Ball and Brown [1968]

  Journal of Accounting Research · 2008-10-14 · 2 citations

  editorial
  PublisherDOI

Frequent coauthors

• Edward L. Maydew

  University of North Carolina at Chapel Hill

  19 shared

• Shiing-wu Wang

  Southern California University for Professional Studies

  14 shared

• Dan S. Dhaliwal

  University of Arizona

  12 shared

• Austan Goolsbee

  University of Chicago

  10 shared

• Shane Heitzman

  7 shared

• Frank Zhang

  Quazar Technologies (India)

  4 shared

• Michelle Hanlon

  3 shared

• Robert Trezevant

  University of Southern California

  3 shared

Education

• B.S.

  Rockhurst College

  1987

• Other

  Arizona State University

  1989

• Ph.D., accounting

  University of Arizona

  1996

Awards & honors

• American Taxation Association Outstanding Manuscript Award (…
• American Taxation Association award for teaching innovation
• Angler Award from the Billfish Foundation (2003)