Abstract

http://ssrn.com/abstract=906066
 
 

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Where Do Firms Incorporate? Deregulation and the Cost of Entry


Marco Becht


Université Libre de Bruxelles (ULB) - Solvay Brussels School of Economics and Management; European Corporate Governance Institute (ECGI)

Colin Mayer


University of Oxford - Said Business School; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Hannes F. Wagner


Bocconi University - Department of Finance; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research

August 2007

ECGI - Law Working Paper No. 70/2006
Journal of Corporate Finance, Vol. 14, No. 3, 2008

Abstract:     
We study how deregulation of corporate law affects the decision of entrepreneurs of where to incorporate. Recent rulings by the European Court of Justice (ECJ) have enabled entrepreneurs to select their country of incorporation independently of their real seat. We analyze foreign incorporations in the U.K., where incorporations of limited liability companies can be arranged at low cost. Using data for over 2 million companies from around the world incorporating in the U.K., we find a large increase in cross-country incorporations from E.U. Member States following the ECJ rulings. In line with regulatory cost theories, incorporations are primarily driven by minimum capital requirements and setup costs in home countries. We record widespread use of special incorporation agents to facilitate legal mobility across countries.

Number of Pages in PDF File: 44

Keywords: Incorporation, costs of regulation, regulatory competition

JEL Classification: G38, K22

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Date posted: June 2, 2006  

Suggested Citation

Becht, Marco and Mayer, Colin and Wagner, Hannes F., Where Do Firms Incorporate? Deregulation and the Cost of Entry (August 2007). ECGI - Law Working Paper No. 70/2006; Journal of Corporate Finance, Vol. 14, No. 3, 2008. Available at SSRN: http://ssrn.com/abstract=906066 or http://dx.doi.org/10.2139/ssrn.906066

Contact Information

Marco Becht (Contact Author)
Université Libre de Bruxelles (ULB) - Solvay Brussels School of Economics and Management ( email )
19 Av Franklin Roosevelt
1050
Brussels
Belgium
European Corporate Governance Institute (ECGI) ( email )
Avenue des Statuaires 120
Brussels, 1180
Belgium
+32 2 650 4466 (Phone)
HOME PAGE: http://www.ecgi.org/members_directory/member.php?member_id=6
Colin Mayer
University of Oxford - Said Business School ( email )
Park End Street
Oxford, OX1 1HP
Great Britain
+44 1865 288112 (Phone)
+44 1865 288805 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Hannes F. Wagner
Bocconi University - Department of Finance ( email )
Via Roentgen 1
Milano, MI 20136
Italy
HOME PAGE: http://faculty.unibocconi.eu/hanneswagner
Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research ( email )
Via Roentgen 1
Milan, 20136
Italy
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