Abstract
Host country tax considerations are critical to multinational enterprise (MNE) foreign direct investment decisions, but understudied in international business (IB) research. We address this gap by examining the relationship
between host country corporate income tax rates (HCCITRs) and foreign subsidiary survival. We develop our hypothesis drawing upon location/country-specific advantage theory and international tax literature. Our longitudinal
sample (1990–2013) comprises 13,468 MNE subsidiaries in 78 countries. Results indicate a one standard deviation (7.7 %) decrease in HCCITR increases subsidiary survival probability (at any given time) by 33 %. This effect is stronger compared to several well studied explanatory variables in IB survival analysis.
between host country corporate income tax rates (HCCITRs) and foreign subsidiary survival. We develop our hypothesis drawing upon location/country-specific advantage theory and international tax literature. Our longitudinal
sample (1990–2013) comprises 13,468 MNE subsidiaries in 78 countries. Results indicate a one standard deviation (7.7 %) decrease in HCCITR increases subsidiary survival probability (at any given time) by 33 %. This effect is stronger compared to several well studied explanatory variables in IB survival analysis.
Original language | English |
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Article number | 101186 |
Pages (from-to) | 1-10 |
Number of pages | 10 |
Journal | Journal of World Business |
Volume | 56 |
Issue number | 2 |
Early online date | 11 Jan 2021 |
DOIs | |
Publication status | Published (in print/issue) - 28 Feb 2021 |
Bibliographical note
Funding Information:This research was in part funded by the American University of Beirut (AUB) University Research Board (URB) grant 2017-18 .
Funding Information:
The authors thank Editor-in-Chief Ajai Gaur and three anonymous reviewers for their constructive comments and suggestions. We also thank Lorraine Eden for reviewing an early draft and providing us with helpful feedback. This research was in part funded by the American University of Beirut (AUB) University Research Board (URB) grant 2017-18.
Publisher Copyright:
© 2021 The Authors
Copyright:
Copyright 2021 Elsevier B.V., All rights reserved.
Keywords
- Corporate tax
- Country specific advantage
- Multinational enterprise
- Subsidiary
- Survival