What drives emerging economy firm acquisitions in tax havens?


Chari M., Acikgoz Ş.

Journal of Business Research, vol.69, no.2, pp.664-671, 2016 (SSCI) identifier

  • Publication Type: Article / Article
  • Volume: 69 Issue: 2
  • Publication Date: 2016
  • Doi Number: 10.1016/j.jbusres.2015.08.034
  • Journal Name: Journal of Business Research
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus
  • Page Numbers: pp.664-671
  • Keywords: Cross-border acquisitions, Emerging economy firms, Institutional weakness, Internationalization motivations, Tax havens
  • Ankara Haci Bayram Veli University Affiliated: No

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.