What drives emerging economy firm acquisitions in tax havens?

Chari, Murali D.R.; Acikgoz, Senay

doi:10.1016/j.jbusres.2015.08.034

Cited by 43 publications

(45 citation statements)

References 35 publications

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“…A nontrivial proportion of emerging economy firm CBAs is in tax havens (Chari & Acikgoz, ; Peng & Parente, ). Tax havens are countries and territories with small economies and relatively rich but small populations.…”

Section: Background Literaturementioning

confidence: 99%

“…They are characterized by very low or zero corporate tax rates and by laws and regulations that facilitate high levels of secrecy about the identities and actions of firms and investors (Chari & Acikgoz, ; Gravelle, ; Hines, ). They do not offer large markets or complementary assets (e.g., natural resources or advanced technologies) that have been noted to drive positive stockholder returns to emerging economy firm CBAs (Chari & Acikgoz, ). How stockholder returns to emerging economy firm CBAs in tax havens differ from the positive returns hypothesized and found for their CBAs in nontax havens is therefore an interesting question.…”

Section: Background Literaturementioning

confidence: 99%

“…Corporate tax rates in emerging economies are substantially higher than those in tax havens (Chari & Acikgoz, ). Tax havens, therefore, provide the opportunity to substantially lower corporate taxes for emerging economy firms.…”

Section: Hypothesesmentioning

confidence: 99%

“…We measure tax haven using a dummy variable with value 1 if the target firm is in one of the 48 countries and territories identified as a tax haven in Dharmapala and Hines (), and 0 if the target firm is in any other country. Dharmapala and Hines's list, used extensively in prior research, combines the lists of tax havens from reputed sources, specifically Hines and Rice () and OECD (Chari & Acikgoz, ). We also check robustness of our results to using lists used in other studies.…”

Section: Empirical Testmentioning

confidence: 99%

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Corporate governance and returns to emerging economy firm acquisitions in tax havens: An empirical test on Indian firms

Chari

Dixit

2019

Thunderbird Intl Bus Rev

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Cross-border acquisitions (CBAs) by emerging economy firms are known to yield positive stockholder returns. A nontrivial fraction of CBAs by emerging economy firms are in tax havens. We argue because of weak corporate governance in emerging economies and the secrecy afforded by tax havens, emerging economy firm CBAs in tax havens yield lower stockholder returns than their CBAs in nontax havens. We also argue the negative effect of tax haven destinations is greater for firms with greater business group ownership and for firms with greater foreign insider ownership. Furthermore, we argue the negative effect of tax haven destinations is mitigated for firms whose stock is actively traded in the market. Empirical tests in a sample of nearly 800 CBAs by Indian firms from 2002 to 2011 support our hypotheses. Our study contributes to a better understanding of stockholder returns to CBAs by emerging economy firms and the influence of corporate governance on these returns. K E Y W O R D Scorporate governance, cross-border acquisitions, emerging economy firms, tax havens

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Section: Background Literaturementioning

confidence: 99%

Section: Background Literaturementioning

confidence: 99%

Section: Hypothesesmentioning

confidence: 99%

Section: Empirical Testmentioning

confidence: 99%

See 2 more Smart Citations

Corporate governance and returns to emerging economy firm acquisitions in tax havens: An empirical test on Indian firms

Chari

Dixit

2019

Thunderbird Intl Bus Rev

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“…For a market seeker, success abroad is contingent upon the ability of the firm to find partners to cooperate with, and to establish relations with abroad (Majkgard & Sharma, 1998). Investing in a host country enhances a firm's ability to serve the market by facilitating greater understanding of client behaviour and greater acceptance of the firm's products in the host country (Chari & Acikgoz, 2016). For market seekers, there is greater necessity to participate in local networks in host countries and put effort in gaining local legitimacy.…”

Section: Foreign Market-entry Strategies In Advanced Business Servicesmentioning

confidence: 99%

Internationalization strategies of emerging market-based multinationals: integration of Indian ICT-ITES companies on the Dutch service outsourcing market

Beerepoot

Roodheuvel

2016

European Planning Studies

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This paper examines the entry of Indian information and communication technology-information technology-enabled services (ICT-ITES) companies on the Dutch service outsourcing market. Using this case study, the paper integrates two academic debates: the rise of emerging country-based multinationals and the international dynamics in the ICT-ITES sector. Indian ICT-ITES firms can no longer only rely on cheap labour in their home country and need to build global delivery capacity in order effectively to compete with Western ICT-ITES multinationals. By examining their entry strategy in the Dutch service outsourcing market, this paper highlights the difficulties of latecomer multinationals in entering the more profitable domains of the ICT-ITES market.ARTICLE HISTORY

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