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Open Access
Article
Publication date: 16 December 2022

Chang Li, YunSeop Hwang and Cheon Yu

The purpose of this paper is to explore the relationship between formal environmental regulation (FER) and informal environmental regulation (IER), technological innovation and…

Abstract

Purpose

The purpose of this paper is to explore the relationship between formal environmental regulation (FER) and informal environmental regulation (IER), technological innovation and employment.

Design/methodology/approach

This paper uses data from the 30 provinces of China during 2003–2015. The impacts of formal and IER and technological innovation on employment are estimated by generalized least squares, and the eastern region of China is analyzed separately.

Findings

First, both formal and IERs have different degrees of significant impact on employment, and the relationship is not a simple linear. FER has an inverted U-shaped relationship with employment, but IER has a U-shaped relationship. However, in the test including technological innovation, the results of the national sample and the eastern sample are different. In the eastern sample, the relationship between informal regulation and employment has an inverted U-shaped curve. Second, the results of model 3 and model 6 show that technological innovation has a significant negative effect on employment both in the national and the eastern region sample.

Research limitations/implications

This paper puts forward corresponding policy implications: first, in designing environmental regulations, it is necessary to consider not only the stringency but also the type of regulation. Second, environmental regulations need to be differentiated by region. Finally, when designing environmental regulations, it is necessary to consider more flexible employment policies that are contingent on the stringency of regulations, in order to prevent employment decline due to technological innovations.

Originality/value

The conclusions about the influence of environmental regulation on employment reached are not consistent in China. Most existing research studies seldom consider environmental regulations into categories and focus only on the whole environmental regulation. This paper pays attention to the influences of different types of environmental regulations on employment. It analyzes the eastern region separately to explore whether there is a difference in the effects of environmental regulations. Furthermore, this considers the effect of technological innovation as a mediator.

Details

Journal of International Logistics and Trade, vol. 21 no. 1
Type: Research Article
ISSN: 1738-2122

Keywords

Article
Publication date: 16 December 2020

Chengwei Xu and Alfred M. Wu

The purpose of this study is to investigate how a country's competitive tax policy influences its inward foreign direct investments (FDI) in the Asia–Pacific region, even when…

Abstract

Purpose

The purpose of this study is to investigate how a country's competitive tax policy influences its inward foreign direct investments (FDI) in the Asia–Pacific region, even when given particular constraints (e.g., population, public governance, skilled labor, and so on) exist.

Design/methodology/approach

The paper uses the system GMM estimation approach to test the hypothesis. Data on FDI, corporate income tax, and various confounding factors were drawn from Ernst and Young's worldwide corporate tax guide, the World Bank, and other sources to create a panel of 28 economies over the period 2000–2016.

Findings

The present research confirms the negative association between corporate income tax (CIT) and FDI inflows. The effects of other confounding factors on FDI net inflows are also supported (e.g., connectivity, GDP per capita, population, skilled labor, and trade openness). Our results support the argument that foreign investments may be more sensitive to CIT. Therefore, CIT is an effective indicator to observe international tax competition.

Originality/value

The present research uses rich data on statutory CIT and other economic and public governance factors to investigate the relationship between tax competition and FDI inflows in the Asia–Pacific region. The findings add important supplements to the nuanced understanding of the political-economic dynamics in this region, especially when cut-throat tax competition, trade tensions, and stagnant economic growth have been key challenges for global economies.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 33 no. 2
Type: Research Article
ISSN: 1096-3367

Keywords

Article
Publication date: 23 February 2021

Huabing Wang and Anne Macy

This paper analyzes the effect of corporate tax cuts on the competitiveness of the tax-cutting countries and neighbor countries.

Abstract

Purpose

This paper analyzes the effect of corporate tax cuts on the competitiveness of the tax-cutting countries and neighbor countries.

Design/methodology/approach

This study utilizes four significant corporate tax reforms among the OECD countries in Europe that offer a one-time tax cut of 6% or more. The short-term event study approach examines the stock index reactions for both the tax-cutting countries and the other countries. Multivariate fixed-effect regressions are employed to study the cross-sectional variations in the non-tax-cut countries.

Findings

This paper finds positive excess returns for Slovakia and Germany around the tax-cut passage. Multivariate analysis of stock market reactions of the non-tax-cutting countries reveals some evidence supporting both the positive spillover effect and the negative competitive loss effect. More advanced countries are more likely to experience higher abnormal returns, while higher tax countries are more likely to suffer lower abnormal returns. Other factors identified that might have influenced the effect of a foreign tax cut include the existing trade flows with the tax-cutting countries, whether the country has a common currency and the export orientation of the economy.

Research limitations/implications

The findings are subject to sample-size issues. The lack of results for the other two countries is due to complicating events, as suggested by the further investigation of concurrent news events around the event days.

Practical implications

The simultaneous analysis of the reform countries and the other countries in the region suggests that policymakers need to consider the relative positioning of their country vs the other countries in terms of economic development and current tax burdens when determining the optimal policy for their country or to respond to the tax policy changes in the other countries.

Originality/value

This study offers empirical evidence regarding the effect of corporate tax changes on competitiveness through the lens of stock markets' reactions, which depend on the net results of the spillover gain vs the competitive loss.

Details

EuroMed Journal of Business, vol. 17 no. 1
Type: Research Article
ISSN: 1450-2194

Keywords

Article
Publication date: 16 May 2023

Chris Wagner and Andrew Delios

Unlike the traditional growth model of emerging markets after economic liberalization, India’s inward foreign direct investment (FDI) surged paralleling its strong economic growth…

Abstract

Purpose

Unlike the traditional growth model of emerging markets after economic liberalization, India’s inward foreign direct investment (FDI) surged paralleling its strong economic growth in the 2000s, despite the failure to establish a strong secondary sector. This creates an opportunity to deepen the conceptual and contextual understanding of the pivotal mechanisms that impel foreign multinational enterprises to invest into India and provides a natural setting to better understand the nature of its institutional, political and economic environment.

Design/methodology/approach

The authors develop a theory contextualized to Indian inward FDI patterns for the 2000–2017 period. The theoretical framework expands upon received investment motives, with explicit consideration given to the idiosyncrasies of developments in India’s recent macro and socioeconomic environment. The authors test the hypotheses using panel data from 134 countries that invested in India, using a Hausman–Taylor estimation.

Findings

The authors find that India’s transition toward a knowledge economy attracts asset augmenting rather than asset exploiting FDI. Investors appear to target long-term investments by gaining access to India’s digital capabilities, R&D, and growing talent base with a high degree of specialization within analytics, biotechnology, engineering, or pharmaceuticals. Foreign investors do not seem to be notably deterred by infrastructural challenges nor by legal and regulatory restrictions.

Originality/value

By providing a new perspective on India’s atheoretical economic development and FDI environment, this study offers a distinct point of comparison with regard to established hypotheses within the extant literature on FDI into emerging markets. Rethinking contemporary investment motive theory by introducing an adapted conceptual framework provides further opportunity to inform the understanding of firm strategies in similar environments.

Open Access
Article
Publication date: 31 December 2011

Shaif Jarallah and Yoshio Kanazaki

This research surveys the recent surge of empirical studies on transfer pricing manipulation by multinational enterprises (MNEs), tax-motivated transfer pricing, particularly from…

Abstract

This research surveys the recent surge of empirical studies on transfer pricing manipulation by multinational enterprises (MNEs), tax-motivated transfer pricing, particularly from the year 1990 to present. The review tackles transfer pricing income shifting behavior of MNEs from three different perspectives: taxation relationship with profitability, intrafirm trade, and foreign direct investment (FDI). There have been significant developments and contributions in this field, despite many limitations, mainly concerning the availability of micro-data in general, (specifically intrafirm trade data which allows capturing much of the heterogeneity which is dangling within inter-sectors), and the tax measurement issue. Yet, this area of study is still developing and promises more achievements.

Details

Journal of International Logistics and Trade, vol. 9 no. 2
Type: Research Article
ISSN: 1738-2122

Keywords

Article
Publication date: 7 January 2021

Eric Boachie Yiadom and Lord Mensah

In this paper, we use empirical models to examine the main channel through which FDI escalates environmental risk. We explore whether countries with “weak” or better still low tax…

Abstract

Purpose

In this paper, we use empirical models to examine the main channel through which FDI escalates environmental risk. We explore whether countries with “weak” or better still low tax rate attract “dirty” FDI to deteriorate their environment

Design/methodology/approach

The analysis uses a 40-year panel to show that foreign direct investment (FDI) and tax policy matter in accounting for cross-country environmental risk.

Findings

Our sample finds support that the tax channel is the main medium through which FDI worsens environmental risk. By discomposing tax policy into low and high regimes, we report that countries that deliberately reform tax policy to bait FDI have higher environmental risk.

Social implications

A useful lesson from here is that using tax policy to lure FDI amounts to shortchanging capital risk for environmental risk.

Originality/value

The paper is unique because it identifies tax policy as a channel through which FDI affects the environment in Africa. Other studies overly simplifies the relationship between FDI and its impact on the environment, and it makes it difficult and ambiguous in offering specific policy direction.

Details

African Journal of Economic and Management Studies, vol. 12 no. 2
Type: Research Article
ISSN: 2040-0705

Keywords

Article
Publication date: 22 October 2021

Ahmad Khodamipour, Mahdi Askari Shahamabad and Fateme Askari Shahamabad

Many developed countries have been using environmental taxes in their economic systems for many years. These taxes have a great impact on reducing the environmental damages of…

Abstract

Purpose

Many developed countries have been using environmental taxes in their economic systems for many years. These taxes have a great impact on reducing the environmental damages of companies and individuals in society. But many developing countries have not used this tool effectively yet, and some countries face barriers to the effective implementation of environmental taxes that make it difficult and unsuccessful. To increase the effectiveness of the implementation of environmental taxes, governments must prioritize barriers and solutions to overcome its barriers. The identified knowledge gap of the pre-literature review is that an overview of the identification which completely considers all barriers and solutions of environmental taxes implementation does not exist. In response to this knowledge gap, this study aims to identify and prioritize the barriers and solutions of environmental taxes implementation.

Design/methodology/approach

Ranking the barriers and solutions is a complicated multi-criteria decision making (MCDM) problem that requires consideration of multiple feasible alternatives and conflicting tangible and intangible criteria. This study addresses the prioritization of solutions of Environmental Taxes implementation by proposing hybrid MCDM methods based on the Fuzzy Analytic Hierarchy Process (Fuzzy-AHP) and the Fuzzy Technique for order preference by similarity to an ideal solution (Fuzzy-TOPSIS) under fuzzy environment. Fuzzy AHP is used to determine the weight of each barrier using a pairwise comparison, and fuzzy TOPSIS is used to finalize the ranking of solutions for more effective implementation of environmental taxes.

Findings

The results showed that environmental tax reform (ETR) (S3) has the highest value among the solutions for more effective implementation of environmental taxes. The result of the proposed model is validated by performing sensitivity analysis.

Research limitations/implications

This study could foster research on the discussion of these barriers and precise ways of implementing solutions to pay more attention to environmental taxes.

Practical implications

Ratings of solutions can be a guide and help governments to improve the implementation of environmental taxes or even develop this policy by being aware of the ranking of barriers and solutions.

Social implications

This paper creates a new perspective on the effective implementation of environmental taxes, which is closely related to improving environmental performance and increasing social welfare through improving the tax system.

Originality/value

For the first time, this study comprehensively identifies barriers and solutions for more effective implementation of environmental taxes and ranks them using two MCDM techniques.

Details

Journal of Applied Accounting Research, vol. 23 no. 3
Type: Research Article
ISSN: 0967-5426

Keywords

Article
Publication date: 28 June 2021

Qamar Uz Zaman, Waheed Akhter, Mariani Abdul-Majid, S. Iftikhar Ul Hassan and Muhammad Fahad Anwar

This study aims to assess the determinants of corporate debt with a particular focus on bank-affiliated and non-bank-affiliated firms during the global financial crisis.

Abstract

Purpose

This study aims to assess the determinants of corporate debt with a particular focus on bank-affiliated and non-bank-affiliated firms during the global financial crisis.

Design/methodology/approach

The authors analyse the data of 395 listed manufacturing firms from Pakistan with 2,370 firm-year observations. The sample is divided into subsamples, namely bank-affiliated, non-bank-affiliated and stand-alone firms. Fixed and panel effect regression models are applied to determine the during, pre-crisis and post-crisis effects on corporate capital structure.

Findings

The robust results of the study reveal that non-bank-affiliated firms have different leverage determinant behaviours with a greater reliance on size, tangibility and profitability. However, bank-affiliated firms seemed to show greater immunity from a crisis compared to other firms. Simultaneously, the stand-alone firms remained at a disadvantage subject to internal financial ties of group-affiliated firms and form a base of market imperfection.

Practical implications

This study's findings imply that financial managers should contain better ties with financial institutions to enhance financial immunity in worse time of financial crisis or COVID-19 global calamity. On the regulation front, these findings call for critical policy regulations to govern the internal ties with financial institutions to create a level playing field for the corporate sector.

Originality/value

To the best of the authors’ knowledge, this study is the first to investigate determinants of corporate debt with a particular focus on bank-affiliated and non-bank-affiliated firms. This work is also novel to explore corporate debt of bank-affiliated and non-bank-affiliated firms during the financial crisis.

Details

Journal of Economic and Administrative Sciences, vol. 39 no. 1
Type: Research Article
ISSN: 1026-4116

Keywords

Article
Publication date: 29 November 2018

Joseph Akadeagre Agana, Abu-Khanifa Mohammed and Stephen Zamore

The purpose of this paper is to examine the potential use of international transfer pricing (ITP) as an income shifting mechanism by multinational corporations (MNCs) in…

Abstract

Purpose

The purpose of this paper is to examine the potential use of international transfer pricing (ITP) as an income shifting mechanism by multinational corporations (MNCs) in developing countries. The paper postulates that income shifting through ITP is likely to be more pronounced in developing countries where weak institutions are present.

Design/methodology/approach

The paper uses a unique unbalanced panel data of 18 companies listed on the Ghana Stock Exchange covering the period of nine years (2008–2016), to investigate whether MNCs use ITP to shift income out of the country. The comparison is made using an indirect approach where performance (e.g. profit before tax) and post-performance measures (e.g. dividend payment) are used for an equal number of foreign and local companies. The empirical analyses include t-tests, pooled and random effects logistic regressions.

Findings

The results show significant differences between foreign controlled entities (FCEs) and Ghanaian controlled entities in terms of capability, profitability and dividend distribution. Since there is a positive between these measures, the results do not suggest possible income shifting by FCEs through ITP.

Research limitations/implications

This paper uses an indirect method of investigating income shifting among MNCs. For future studies, a more direct method can be adopted by examining import and export prices of specific products for both foreign and domestic firms.

Originality/value

The study investigates the possibility of income shifting arising from ITP practices among multinationals in developing countries. To the best of the authors’ knowledge, this paper is the first in this regard. Thus, the study contributes to the transfer pricing and income shifting literature by providing evidence from a developing country.

Details

International Journal of Emerging Markets, vol. 13 no. 5
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 14 April 2014

Jianhong Zhang, Jiangang Jiang and Chaohong Zhou

– The purpose of this paper is to analyze the impact of diplomatic activities on outward foreign direct investment (OFDI).

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Abstract

Purpose

The purpose of this paper is to analyze the impact of diplomatic activities on outward foreign direct investment (OFDI).

Design/methodology/approach

The paper first develops a set of hypotheses drawing insights from politics, international business and institutional theory. It then tests these hypotheses by estimation of Panel Corrected Standard Error models, using the data of Chinese OFDI flow to 131 countries over the period of 2003-2010.

Findings

The main findings are: friendly bilateral diplomatic activities help OFDI in general; bilateral diplomatic activities provide effective support to some sensitive and important investments; and bilateral diplomatic activities play an important role in host countries where institutions are absent or poor in quality.

Practical implications

Friendly bilateral diplomatic activities provide strong support to multinationals investing abroad.

Originality/value

The paper incorporates a neglected but important factor, diplomacy, into a model to analyze its influences on OFDI. It investigates not only the direct impact of diplomatic activities on OFDI but also their moderating effect on other OFDI determinants, such as economic and institutional factors.

Details

International Journal of Emerging Markets, vol. 9 no. 2
Type: Research Article
ISSN: 1746-8809

Keywords

1 – 10 of 450