Impact of Carbon Tax and Environmental Regulation on Inbound Cross-Border Mergers and Acquisitions Volume: An Evidence from India

Climate change, global warming, and carbon emission are global issues. Countries are strengthening their environmental regulations to mitigate the emission problem. According to the pollution haven hypothesis, rich countries invest in emerging economies where the institutional framework is weak to m...

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Bibliographic Details
Published in:International journal of financial studies 2022-12, Vol.10 (4), p.106
Main Authors: Raghavendra, Chandrika, Rampilla, Mahesh, Thanikella, Venkata Ramana, Gupta, Isha
Format: Article
Language:English
Subjects:
Acquisitions and mergers
Analysis
Carbon dioxide
carbon tax
Climate change
control of corruption
Corruption
cross-border mergers and acquisitions
Economic growth
Economic reform
Emissions
Emissions (Pollution)
Energy consumption
Environmental policy
Environmental protection
environmental regulation
Environmental regulations
Environmental tax
Environmentalists
Foreign investments
Global warming
Host country
Hypotheses
India
Multinational corporations
R&D
Regulation
Research & development
Sustainable development
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Summary:Climate change, global warming, and carbon emission are global issues. Countries are strengthening their environmental regulations to mitigate the emission problem. According to the pollution haven hypothesis, rich countries invest in emerging economies where the institutional framework is weak to migrate the emissions. With this background, this study examines the impact of the introduction of the carbon tax in India and environmental regulation restriction distance on India’s inbound cross-border mergers and acquisitions (a form of foreign direct investment) volume using a 979 country-pair-year observation sample. The Tobit regression model findings suggest that carbon tax introduction and environmental regulation distance negatively impact India’s inbound cross-border mergers and acquisitions volume. Furthermore, control of corruption intensifies its impact by effectively moderating them. The results indicate that India can avoid becoming a pollution haven by strengthening its environmental policies and controlling corruption. These results provide insight into strengthening the policies relating to environmental regulations and continuing the efforts required to control corruption in India.
ISSN:2227-7072
2227-7072
DOI:10.3390/ijfs10040106