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Impact of Carbon Tax and Environmental Regulation on Inbound Cross-Border Mergers and Acquisitions Volume: An Evidence from India

Author

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  • Chandrika Raghavendra

    (Department of Management and Commerce, Amrita School of Arts and Sciences, Mysuru Campus, Amrita Vishwa Vidyapeetham, Bhogadi 570026, Karnataka, India)

  • Mahesh Rampilla

    (Department of Management and Commerce, Amrita School of Arts and Sciences, Mysuru Campus, Amrita Vishwa Vidyapeetham, Bhogadi 570026, Karnataka, India)

  • Venkata Ramana Thanikella

    (Birla Institute of Management Technology, Greater Noida 201306, Uttar Pradesh, India)

  • Isha Gupta

    (Amity University, Noida 201303, Uttar Pradesh, India)

Abstract

Climate change, global warming, and carbon emission are global issues. Countries are strengthening their environmental regulations to mitigate the emission problem. According to the pollution haven hypothesis, rich countries invest in emerging economies where the institutional framework is weak to migrate the emissions. With this background, this study examines the impact of the introduction of the carbon tax in India and environmental regulation restriction distance on India’s inbound cross-border mergers and acquisitions (a form of foreign direct investment) volume using a 979 country-pair-year observation sample. The Tobit regression model findings suggest that carbon tax introduction and environmental regulation distance negatively impact India’s inbound cross-border mergers and acquisitions volume. Furthermore, control of corruption intensifies its impact by effectively moderating them. The results indicate that India can avoid becoming a pollution haven by strengthening its environmental policies and controlling corruption. These results provide insight into strengthening the policies relating to environmental regulations and continuing the efforts required to control corruption in India.

Suggested Citation

  • Chandrika Raghavendra & Mahesh Rampilla & Venkata Ramana Thanikella & Isha Gupta, 2022. "Impact of Carbon Tax and Environmental Regulation on Inbound Cross-Border Mergers and Acquisitions Volume: An Evidence from India," IJFS, MDPI, vol. 10(4), pages 1-16, November.
    • Handle: RePEc:gam:jijfss:v:10:y:2022:i:4:p:106-:d:980445
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    References listed on IDEAS

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    Cited by:

    1. Raghavendra, Chandrika & Sharif, Taimur & Mahesh, Rampilla & Yadav, Miklesh Prasad & Abedin, Mohammad Zoynul, 2023. "Do market, resource and knowledge distance impact inbound cross-border acquisition?," Global Finance Journal, Elsevier, vol. 57(C).
    2. Hunjra, Ahmed Imran & Bouri, Elie & Azam, Muhammad & Azam, Rauf I & Dai, Jiapeng, 2024. "Economic growth and environmental sustainability in developing economies," Research in International Business and Finance, Elsevier, vol. 70(PA).
    3. Lu, Juan & Li, He & Guo, Feiyu, 2024. "Low-carbon mergers and acquisitions as a driver for higher energy efficiency: Evidence from China's high energy-consuming companies," Energy, Elsevier, vol. 290(C).

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