Tax havens and emerging market multinationals: The role of property rights protection and economic freedom

Chris Jones, Yama Temouri, Karim Kirollos, Jun Du

Research output: Contribution to journalArticlepeer-review


This paper presents an investigation of the relationship between home country institutional quality and EMNE
investments in tax havens. We develop a conceptual framework that adapts the institutional escapism framework,
whereby EMNEs expand globally to escape any home country institutional hazards, together with the institutional
leverage framework, whereby EMNEs can leverage their home country institutions as a competitive advantage.
This enabled us to conceptually derive and explain the curvilinear (U-shaped) relationship that develops between
institutional differences and reforms over time and how this affects EMNE strategy towards tax havens. Based on
a large cross-country firm-level dataset, our empirical results confirm the curvilinear relationship, such that
EMNEs from weaker institutional environments are more likely to own tax haven subsidiaries. However, as
emerging countries improve their institutional environment, the likelihood of investing in tax havens declines
before increasing again at a time when said emerging countries have achieved developmental stages similar to
those of developed countries. Based on our results, we draw several managerial and policy related implications.
Original languageEnglish
Article number113373
Number of pages14
JournalJournal of Business Research
Issue numberPart B
Early online date17 Nov 2022
Publication statusPublished - Jan 2023


  • Economic freedom
  • Emerging markets
  • Institutions
  • Multinationals
  • Property rights
  • Tax havens


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