Host Country Corporate Income Tax Rate and Foreign Subsidiary Survival  

Bassam Farah, Rida Elias, Dwarka Chakravarty, Paul W. Beamish

Research output: Contribution to journalArticlepeer-review

4 Downloads (Pure)

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.
Original languageEnglish
Article number101186
Number of pages10
JournalJournal of World Business
Volume56
Issue number2
Early online date11 Jan 2021
DOIs
Publication statusPublished - 28 Feb 2021

Keywords

  • Corporate tax
  • Country specific advantage
  • Multinational enterprise
  • Subsidiary
  • Survival

Fingerprint Dive into the research topics of 'Host Country Corporate Income Tax Rate and Foreign Subsidiary Survival  '. Together they form a unique fingerprint.

Cite this