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What drives emerging economy firm acquisitions in tax havens?

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  • Chari, Murali
  • Acikgoz, Senay

Abstract

We note that a non-trivial fraction of international acquisitions by emerging economy firms are in tax havens. We argue that such acquisitions are driven by different motivations than the four (market seeking, resource seeking, low cost seeking, and knowledge or strategic asset seeking) identified in the international business literature. Specifically, we argue that such acquisitions are driven by institutional weakness in the home country and lower taxes in the host country. Empirical tests using data on cross border acquisitions by firms from ten emerging economies with the most numbers of cross border acquisitions lend support to our arguments.

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  • Chari, Murali & Acikgoz, Senay, 2016. "What drives emerging economy firm acquisitions in tax havens?," Journal of Business Research, Elsevier, vol. 69(2), pages 664-671.
    • Handle: RePEc:eee:jbrese:v:69:y:2016:i:2:p:664-671
    DOI: 10.1016/j.jbusres.2015.08.034
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    11. Park, Kathleen Marshall & Meglio, Olimpia & Schriber, Svante, 2019. "Building a global corporate social responsibility program via mergers and acquisitions: A managerial framework," Business Horizons, Elsevier, vol. 62(3), pages 395-407.
    12. Nor Shaipah Abdul Wahab, 2016. "Malaysian multinational companies (MNC): Permanent and temporary nature of tax planning," Cogent Business & Management, Taylor & Francis Journals, vol. 3(1), pages 1248644-124, December.
    13. Xie, En & Reddy, K.S. & Liang, Jie, 2017. "Country-specific determinants of cross-border mergers and acquisitions: A comprehensive review and future research directions," Journal of World Business, Elsevier, vol. 52(2), pages 127-183.
    14. Mazhar Ummad, 2019. "Terrorism and Firm Performance: Empirical Evidence from Pakistan," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(1), pages 1-17, January.
    15. Jones, Chris & Temouri, Yama & Kirollos, Karim & Du, Jun, 2023. "Tax havens and emerging market multinationals: The role of property rights protection and economic freedom," Journal of Business Research, Elsevier, vol. 155(PB).
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