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

Chandrika Raghavendra (), Mahesh Rampilla, Venkata Ramana Thanikella and Isha Gupta
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Chandrika Raghavendra: Department of Management and Commerce, Amrita School of Arts and Sciences, Mysuru Campus, Amrita Vishwa Vidyapeetham, Bhogadi 570026, Karnataka, India
Mahesh Rampilla: Department of Management and Commerce, Amrita School of Arts and Sciences, Mysuru Campus, Amrita Vishwa Vidyapeetham, Bhogadi 570026, Karnataka, India
Venkata Ramana Thanikella: Birla Institute of Management Technology, Greater Noida 201306, Uttar Pradesh, India
Isha Gupta: Amity University, Noida 201303, Uttar Pradesh, India

IJFS, 2022, vol. 10, issue 4, 1-16

Abstract: 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.

Keywords: cross-border mergers and acquisitions; carbon tax; environmental regulation; control of corruption; India (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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