The Effect of Repatriation Tax Costs on U.S. Multinational Investment
By Michelle Hanlon, Rebecca Lester, Rodrigo S. Verdi. 2015
223 citations recorded by the source corpus.
This paper investigates whether the U.S. repatriation tax for U.S. multinational corporations affects foreign investment. Our results show that the locked-out cash due to repatriation tax costs is associated with a higher likelihood of foreign (but not domestic) acquisitions. We also find a negative association between tax-induced foreign cash holdings and the market reaction to foreign deals. This result suggests that the investment activity of firms with high repatriation tax costs is viewed by the market as less value-enhancing than that of firms with low tax costs, consistent with foreign investment of firms with high repatriation tax costs possibly reflecting agency-driven behavior.
Subfields: Accounting, Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/3f3d7289151ab7a036f4fae8ec90a970868e1d26
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Accounting
- Kevin S. Markle
- Scott D. Dyreng
- Ryan J. Wilson
- Gordon Richardson
- Roman Lanis
- Jennifer Blouin
- Michelle Hanlon
- Edward L. Maydew
In Economics and Econometrics
- Kevin S. Markle
- Scott D. Dyreng
- Ryan J. Wilson
- Gordon Richardson
- Roman Lanis
- Jennifer Blouin
- Michelle Hanlon
- Edward L. Maydew
Citations in the corpus
- Corporate cash holdings: Causes and consequences (2015, unknown): “A comparison of levels of cash held by US public and private firms by Gao et cash on domestic investment when repatriation costs are lowered (e.g. Faulkender and Petersen, 2012) and on foreign investment in the form of acquisitions (Hanlon et al. (2015).”
- The taxman cometh: Does tax uncertainty affect corporate cash holdings? (2017, unknown): “12 As discussed by Foley et al. (2007) and Hanlon et al. (2015), the tax repatriation tax cost measure as computed in Foley et al. involves assumptions.”
- The Effect of Financial Constraints on Income Shifting by U.S. Multinationals (2016, background): “The second is hat investment distortions that occur when cash is trapped would be reduced (see Hanlon et al. 2015, and Edwards et al. 2015, for example).”
- Precautionary Savings with Risky Assets: When Cash Is Not Cash (2016, unknown): “, Jensen (1969), Carhart (1997), Fama and French (2010), and references therein).”