You Can't Take it with You: Behavioral Finance and Corporate Expatriations
University of Illinois College of Business Department of Accountancy
U.C. Davis Law Review, Vol. 37, Issue 2, 2003
In 2002, reports of corporate expatriations filled the headlines. These reports came as something of a surprise because the anti-inversion rules enacted in the early 1990s should have prevented almost all of these transactions. Various commentators have tried to explain this phenomenon. These explanations, however, are not consistent with the empirical evidence. This Article offers an explanation for the current inversion activity by arguing that corporate managers are exploiting fluctuations in stock prices to expatriate at reduced cost. Moreover, the Article proposes legislation to reduce expatriations consistent with this model.
Number of Pages in PDF File: 69
Keywords: tax law, tax policy, corporate law, behavioral economics, public economics
JEL Classification: K20, K34, K200, K290
Date posted: June 8, 2003 ; Last revised: September 7, 2013