You Can't Take it with You: Behavioral Finance and Corporate Expatriations

69 Pages Posted: 8 Jun 2003 Last revised: 7 Sep 2013

Elizabeth Chorvat

University of Illinois College of Business Department of Accountancy

Abstract

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.

Keywords: tax law, tax policy, corporate law, behavioral economics, public economics

JEL Classification: K20, K34, K200, K290

Suggested Citation

Chorvat, Elizabeth, You Can't Take it with You: Behavioral Finance and Corporate Expatriations. U.C. Davis Law Review, Vol. 37, Issue 2, 2003. Available at SSRN: https://ssrn.com/abstract=413200 or http://dx.doi.org/10.2139/ssrn.413200

Elizabeth Chorvat (Contact Author)

University of Illinois College of Business Department of Accountancy ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

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