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Cross-border acquisitions and optimal government policy

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Cross-border acquisitions and optimal government policy. / Bose, Gautam; Dasgupta, Sudipto; Ghosh, Arghya.

In: Economic Record, Vol. 87, No. 278, 09.2011, p. 427-437.

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Bose, Gautam ; Dasgupta, Sudipto ; Ghosh, Arghya. / Cross-border acquisitions and optimal government policy. In: Economic Record. 2011 ; Vol. 87, No. 278. pp. 427-437.

Bibtex

@article{49c78a605fb5403dae140d25bf1d1d5f,
title = "Cross-border acquisitions and optimal government policy",
abstract = "This article analyses the optimality of policy specifications used to regulate the acquisition and operation of local firms by multinational enterprises. We emphasise the consequence of such regulations on the price of the domestic firm in the market for corporate control. We show that it is optimal to impose ceilings on foreign ownership of domestic firms when the government's objective is to maximise domestic shareholder profits, or a sum of those profits and tax revenues. While the optimal ceiling is high enough for the multinational enterprise (MNE) to gain control of the domestic firm, it nevertheless influences the price that the MNE must pay for the domestic firm's shares to the advantage of the domestic shareholders. Surprisingly, stringent restrictions on transfer pricing turn out to be strictly suboptimal in this context.",
author = "Gautam Bose and Sudipto Dasgupta and Arghya Ghosh",
year = "2011",
month = sep,
doi = "10.1111/j.1475-4932.2011.00727.x",
language = "English",
volume = "87",
pages = "427--437",
journal = "Economic Record",
issn = "0013-0249",
publisher = "Wiley-Blackwell",
number = "278",

}

RIS

TY - JOUR

T1 - Cross-border acquisitions and optimal government policy

AU - Bose, Gautam

AU - Dasgupta, Sudipto

AU - Ghosh, Arghya

PY - 2011/9

Y1 - 2011/9

N2 - This article analyses the optimality of policy specifications used to regulate the acquisition and operation of local firms by multinational enterprises. We emphasise the consequence of such regulations on the price of the domestic firm in the market for corporate control. We show that it is optimal to impose ceilings on foreign ownership of domestic firms when the government's objective is to maximise domestic shareholder profits, or a sum of those profits and tax revenues. While the optimal ceiling is high enough for the multinational enterprise (MNE) to gain control of the domestic firm, it nevertheless influences the price that the MNE must pay for the domestic firm's shares to the advantage of the domestic shareholders. Surprisingly, stringent restrictions on transfer pricing turn out to be strictly suboptimal in this context.

AB - This article analyses the optimality of policy specifications used to regulate the acquisition and operation of local firms by multinational enterprises. We emphasise the consequence of such regulations on the price of the domestic firm in the market for corporate control. We show that it is optimal to impose ceilings on foreign ownership of domestic firms when the government's objective is to maximise domestic shareholder profits, or a sum of those profits and tax revenues. While the optimal ceiling is high enough for the multinational enterprise (MNE) to gain control of the domestic firm, it nevertheless influences the price that the MNE must pay for the domestic firm's shares to the advantage of the domestic shareholders. Surprisingly, stringent restrictions on transfer pricing turn out to be strictly suboptimal in this context.

U2 - 10.1111/j.1475-4932.2011.00727.x

DO - 10.1111/j.1475-4932.2011.00727.x

M3 - Journal article

VL - 87

SP - 427

EP - 437

JO - Economic Record

JF - Economic Record

SN - 0013-0249

IS - 278

ER -