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Why do businesses incorporate in other EU Member States? An empirical analysis of the role of conflict of laws rules

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  • Gerner-Beuerle, Carsten
  • Mucciarelli, Federico M.
  • Schuster, Edmund
  • Siems, Mathias

Abstract

Research in law, political science and economics has taken a strong interest in the way companies strategically incorporate in foreign jurisdictions. However, the empirical research about corporate mobility in the EU has so far been limited in two respects: it has focused on the analysis of foreign companies in the UK and it has mainly been concerned with differences in the costs of incorporation such as minimum capital requirements. This paper aims to fill these gaps. It is the first paper that presents data on incorporations of foreign businesses in the commercial registers of each EU Member State. It is also the first one to assess the impact of differences in the conflict of laws rules applicable to companies as they reflect the case law of the Court of Justice on the freedom of establishment. It finds that countries which have a clear-cut version of the ‘incorporation theory’ attract more incorporations than countries which have retained elements of the ‘real seat theory’. The paper also discusses the policy implications from these findings for EU harmonisation in this field.

Suggested Citation

  • Gerner-Beuerle, Carsten & Mucciarelli, Federico M. & Schuster, Edmund & Siems, Mathias, 2018. "Why do businesses incorporate in other EU Member States? An empirical analysis of the role of conflict of laws rules," International Review of Law and Economics, Elsevier, vol. 56(C), pages 14-27.
    • Handle: RePEc:eee:irlaec:v:56:y:2018:i:c:p:14-27
    DOI: 10.1016/j.irle.2018.05.002
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    More about this item

    Keywords

    Freedom of establishment; Market for incorporations; Corporate mobility; Conflict of laws; Private international law;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • K15 - Law and Economics - - Basic Areas of Law - - - Civil Law; Common Law
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law
    • L29 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Other
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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