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Oxidative addition of aryl chlorides to palladium has been investigated by hybrid density functional theory methods (B3LYP), including a continuum model describing the solvent implicitly. A series of para-substituted aryl chlorides were studied to see the influence of electronic effects on the reaction. It was found that the experimentally observed higher reactivity of the more electron deficient aryl chlorides is due to their ability to accept back-donation from Pd⁰ and form reasonably strong pre-reactive complexes. This effect is less pronounced in the transition state; when it is measured from the pre-reactive complex, the barrier to oxidative addition is actually higher for the electron-deficient aryl chlorides, but the overall reaction barrier is still lower than for the electron-rich aryl chlorides.