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<p>This paper examines how the institutional environment influences multinational enterprise (MNE) strategies regarding tax haven use. We develop a theoretical framework linking democracy and natural resource endowments to the strategic use of tax havens in emerging markets. Using data from 4630 emerging market MNEs (EMNEs) between 2008 and 2018, we find that higher levels of democracy in an EMNE’s country of origin are associated with reduced tax haven use. However, the use of tax havens by EMNEs increases with higher natural resource rents in their home economies. Additionally, we find that natural resource rents moderate the impact of democracy on tax haven use, such that the natural resource curse weakens the positive effect of democracy on firm behavior. Our results offer important managerial and policy implications.</p>

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Democracy and Natural Resources: Their Institutional Impact on Tax Haven Use by Emerging Market Multinational Enterprises

  • 期刊论文

  • 出版模式：

    开放获取

  • 发表日期：

    2025年8月8日

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  • Kelon Felix,
  • Chris Jones,
  • Johan Rewilak,
  • Yama Temouri

摘要

This paper examines how the institutional environment influences multinational enterprise (MNE) strategies regarding tax haven use. We develop a theoretical framework linking democracy and natural resource endowments to the strategic use of tax havens in emerging markets. Using data from 4630 emerging market MNEs (EMNEs) between 2008 and 2018, we find that higher levels of democracy in an EMNE’s country of origin are associated with reduced tax haven use. However, the use of tax havens by EMNEs increases with higher natural resource rents in their home economies. Additionally, we find that natural resource rents moderate the impact of democracy on tax haven use, such that the natural resource curse weakens the positive effect of democracy on firm behavior. Our results offer important managerial and policy implications.