The influence of business groups on board composition in offshore financial multinational enterprises
(2023) In International Business Review 32(3).- Abstract
Based on resource dependence theory we argue for an influence of business groups (BGs) on the board composition of constituent offshore financial multinational enterprises (FMNEs). Using a unique sample of 171 Caribbean FMNEs in an inter-island BG setting, we find BGs’ control in constituent firms to be indicative of the importance of the internal financing and intermediation within the group network. This control leads to a higher proportion of lawyers hired to the boards of directors in BG-constituent firms and supports the argument that lawyers provide skills in complex offshore regulatory frameworks that facilitate BGs’ optimal tax management. Furthermore, we observe that an increased adoption of shareholder rights governance by... (More)
Based on resource dependence theory we argue for an influence of business groups (BGs) on the board composition of constituent offshore financial multinational enterprises (FMNEs). Using a unique sample of 171 Caribbean FMNEs in an inter-island BG setting, we find BGs’ control in constituent firms to be indicative of the importance of the internal financing and intermediation within the group network. This control leads to a higher proportion of lawyers hired to the boards of directors in BG-constituent firms and supports the argument that lawyers provide skills in complex offshore regulatory frameworks that facilitate BGs’ optimal tax management. Furthermore, we observe that an increased adoption of shareholder rights governance by BG-constituent firms is associated with increased engagement with outside resource providers, increased potential conflicts of interest and hence a need for hiring more lawyers. Our interpretation is that offshore FMNEs have a need for more lawyers, whose legal skill is critical to the competitive advantage of FMNEs.
(Less)
- author
- Hearn, Bruce ; Oxelheim, Lars LU and Randøy, Trond
- organization
- publishing date
- 2023
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- Business Groups, Caribbean, Institutions, Offshore, Offshore financial MNE, Tax Havens
- in
- International Business Review
- volume
- 32
- issue
- 3
- article number
- 102084
- publisher
- Elsevier
- external identifiers
-
- scopus:85146991597
- ISSN
- 0969-5931
- DOI
- 10.1016/j.ibusrev.2022.102084
- language
- English
- LU publication?
- yes
- id
- cf9665cb-ee72-4644-a2ca-73ba142a91ef
- date added to LUP
- 2023-02-14 14:44:39
- date last changed
- 2023-10-26 14:51:39
@article{cf9665cb-ee72-4644-a2ca-73ba142a91ef,
abstract = {{<p>Based on resource dependence theory we argue for an influence of business groups (BGs) on the board composition of constituent offshore financial multinational enterprises (FMNEs). Using a unique sample of 171 Caribbean FMNEs in an inter-island BG setting, we find BGs’ control in constituent firms to be indicative of the importance of the internal financing and intermediation within the group network. This control leads to a higher proportion of lawyers hired to the boards of directors in BG-constituent firms and supports the argument that lawyers provide skills in complex offshore regulatory frameworks that facilitate BGs’ optimal tax management. Furthermore, we observe that an increased adoption of shareholder rights governance by BG-constituent firms is associated with increased engagement with outside resource providers, increased potential conflicts of interest and hence a need for hiring more lawyers. Our interpretation is that offshore FMNEs have a need for more lawyers, whose legal skill is critical to the competitive advantage of FMNEs.</p>}},
author = {{Hearn, Bruce and Oxelheim, Lars and Randøy, Trond}},
issn = {{0969-5931}},
keywords = {{Business Groups; Caribbean; Institutions; Offshore; Offshore financial MNE; Tax Havens}},
language = {{eng}},
number = {{3}},
publisher = {{Elsevier}},
series = {{International Business Review}},
title = {{The influence of business groups on board composition in offshore financial multinational enterprises}},
url = {{http://dx.doi.org/10.1016/j.ibusrev.2022.102084}},
doi = {{10.1016/j.ibusrev.2022.102084}},
volume = {{32}},
year = {{2023}},
}