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The Economic Impact of Forming a European Company

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  • Lars Hornuf
  • Abdulkadir Mohamed
  • Armin Schwienbacher

Abstract

Ever since 2004 companies located in Member States of the European Economic Area have been able to opt to incorporate in a supranational legal form, the Societas Europaea. We found that companies located in Member States where the Societas Europaea offers additional legal arbitrage opportunities benefit most. Moreover, our results show that the stock price reaction is positive when the decision to incorporate as an Societas Europaea involves moving the firm's registered office and that firms are moving to jurisdictions with significantly lower corporate tax rates. Finally, we found evidence of uncertainty at the registration date but not at the time of the shareholder meeting.

Suggested Citation

  • Lars Hornuf & Abdulkadir Mohamed & Armin Schwienbacher, 2019. "The Economic Impact of Forming a European Company," Journal of Common Market Studies, Wiley Blackwell, vol. 57(4), pages 659-674, July.
    • Handle: RePEc:bla:jcmkts:v:57:y:2019:i:4:p:659-674
    DOI: 10.1111/jcms.12839
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    References listed on IDEAS

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    Cited by:

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    2. Reuter, Christian & Kaufhold, Marc-André & Schmid, Stefka & Spielhofer, Thomas & Hahne, Anna Sophie, 2019. "The impact of risk cultures: Citizens' perception of social media use in emergencies across Europe," Technological Forecasting and Social Change, Elsevier, vol. 148(C).
    3. Belot, François & Waxin, Timothée, 2022. "Mandatory employee board representation: Good news for family firms?," International Review of Law and Economics, Elsevier, vol. 71(C).
    4. Conan Hom & Danny Samson & Christina Cregan & Peter Cebon, 2022. "Director independence: Going beyond misaligned incentives to resource dependence," Australian Journal of Management, Australian School of Business, vol. 47(1), pages 53-78, February.

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