The Experts below are selected from a list of 13782 Experts worldwide ranked by ideXlab platform
David M P Samuel - One of the best experts on this subject based on the ideXlab platform.
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Repatriation taxes internal agency conflicts and subsidiary level investment efficiency
The Accounting Review, 2021Co-Authors: Harald Amberger, Kevin Markle, David M P SamuelAbstract:Using a global sample of multinational corporations (MNCs) and their foreign subsidiaries, we find that Repatriation taxes impair subsidiary-level investment efficiency. Consistent with internal agency conflicts between the central management of the MNC and the manager of the foreign subsidiary being the driver, we find that this effect is prevalent in subsidiaries with high information asymmetry, in subsidiaries that are weakly monitored, and subsidiaries of cash-rich MNCs. Natural experiments in the UK and Japan establish a causal relationship for our findings and suggest that a repeal of Repatriation taxes increases subsidiary-level investment efficiency while reducing the level of investment. Our paper provides timely empirical evidence to inform expectations for the effects of a recent change to the U.S. international tax law which eliminated Repatriation taxes from most of the future foreign earnings of U.S. MNCs.
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Repatriation taxes internal agency conflicts and subsidiary level investment efficiency
Social Science Research Network, 2020Co-Authors: Harald Amberger, Kevin Markle, David M P SamuelAbstract:Using a global sample of multinational corporations (MNCs) and their foreign subsidiaries, we find that Repatriation taxes impair subsidiary-level investment efficiency. Consistent with internal agency conflicts between the central management of the MNC and the manager of the foreign subsidiary being the driver, we show that this effect is concentrated in subsidiaries with high information asymmetry and in subsidiaries that are weakly monitored. Quasi-natural experiments in the UK and Japan establish a causal relationship for our findings and suggest that a repeal of Repatriation taxes increases subsidiary-level investment efficiency while reducing the level of investment. Our paper provides timely empirical evidence to inform expectations for the effects of a recent change to the U.S. international tax law that eliminated Repatriation taxes from most of the future foreign earnings of U.S. MNCs.
Rodrigo S Verdi - One of the best experts on this subject based on the ideXlab platform.
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the effect of Repatriation tax costs on u s multinational investment
Journal of Financial Economics, 2015Co-Authors: Michelle Hanlon, Rebecca Lester, Rodrigo S VerdiAbstract:Abstract 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.
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the effect of Repatriation tax costs on u s multinational investment
Social Science Research Network, 2014Co-Authors: Michelle Hanlon, Rebecca Lester, Rodrigo S VerdiAbstract:This paper investigates whether the U.S. Repatriation tax for U.S. multinational corporations (MNCs) affects foreign investment. Prior research shows that Repatriation tax costs are positively associated with cash overseas, but the use of such cash is not well understood. 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 that the market reaction to an announcement of foreign acquisitions is more negative for firms with more locked-out cash. These results highlight an unintended consequence of U.S. tax policy on worldwide investment activity.
Philip Saure - One of the best experts on this subject based on the ideXlab platform.
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Repatriation of debt in the euro crisis evidence for the secondary market theory
Research Papers in Economics, 2014Co-Authors: Filippo Brutti, Philip SaureAbstract:The Euro Crisis has stopped the process of the European financial integration and triggered a strong Repatriation of debt from foreign to domestic investors. We investigate this empirical pattern in light of competing theories of cross-border portfolio allocation. Three empirical regularities stand out: i) Repatriation of debt occurred mainly in crisis countries; ii) Repatriation affected mainly public debt; iii) public debt of crisis countries was reallocated to politically influential countries within the Euro Area. Standard theories are in line with pattern (i) at best. We argue that the full picture constitutes evidence for the "secondary market theory" of sovereign debt.
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Repatriation of debt in the euro crisis evidence for the secondary market theory
Social Science Research Network, 2013Co-Authors: Filippo Brutti, Philip SaureAbstract:The Euro Crisis has marked a sharp inversion in the process of the European financial integration and, more specifically, a Repatriation of countries' debt from foreign to domestic investors. Yet the drivers of the financial fragmentation remain unclear. This paper investigates the empirical patterns in light of competing theories of cross-border portfolio allocation. Three main empirical regularities stand out: i) the Repatriation of debt occurred primarily in crisis countries; ii) the Repatriation affected mainly public debt; iii) the public debt of crisis countries was reallocated to politically influential countries within the Euro Area. Standard theories of portfolio allocation and home bias can explain the first pattern at best. We argue that the second and, to some extent, the third pattern constitute evidence in favor of the "secondary market theory" of sovereign debt. The emerging picture suggests that the process of financial fragmentation may reverse as soon as risks of sovereign defaults abate.
Kuo Zhang - One of the best experts on this subject based on the ideXlab platform.
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foreign cash taxes internal capital markets and agency problems
Review of Financial Studies, 2017Co-Authors: Jarrad Harford, Cong Wang, Kuo ZhangAbstract:When the fraction of a firm’s cash held overseas is greater, its shareholders value that cash lower. This goes beyond a pure tax effect: the Repatriation tax friction disrupts the firm’s internal capital market, distorting its investment policy. Firms underinvest domestically and overinvest abroad. Our findings are more pronounced when firms are subject to higher Repatriation tax rates, higher costs of borrowing, and more agency problems. Overall, our evidence suggests that a combination of taxes, financing frictions, and agency problems leads to a valuation discount for foreign cash and documents real effects of how foreign earnings are taxed.
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foreign cash taxes internal capital markets and agency problems
Social Science Research Network, 2016Co-Authors: Jarrad Harford, Cong Wang, Kuo ZhangAbstract:The greater is the fraction of a firm’s cash held overseas, the lower shareholders value that cash. This goes beyond a pure tax effect — the Repatriation tax friction disrupts the firm’s internal capital market, distorting its investment policy. Firms underinvest domestically and overinvest abroad. Our findings are more pronounced when firms are subject to higher Repatriation tax rates, higher costs of borrowing, and more agency problems. Overall, our evidence suggests that a combination of taxes, financing frictions, and agency problems leads to a valuation discount for foreign cash and documents real effects of how foreign earnings are taxed.
Harry Grubert - One of the best experts on this subject based on the ideXlab platform.
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Repatriation taxes Repatriation strategies and multinational financial policy
Research Papers in Economics, 2002Co-Authors: Rosanne Altshuler, Harry GrubertAbstract:Several investment-Repatriation strategies are added to the standard model of a parent and its affiliate in which the affiliate is located in a low-tax country and is limited to two alternatives: repatriating taxable dividends to the parent or investing in its own real operations. In our model, the subsidiary can invest in passive assets which the parent can borrow against, making any direct taxable flow to the parent unnecessary. The low-tax subsidiary can also use its earnings to invest in a related high-tax affiliate which becomes the vehicle for tax-free Repatriations. Alternatively, the low-tax affiliate can be capitalized by equity injections through an upper-tier sibling. This reduces the tax on Repatriations from the low-tax subsidiary because taxes at home on foreign source income are based on a blend of the siblings' tax rates. We show analytically how the availability of these strategies can effect real investment in the low-tax subsidiary and throughout the worldwide corporation. We use firm level data for U.S. multinational corporations to test for the importance of these alternative strategies. The evidence is generally consistent with the theory, particularly the "triangular" strategies using related affiliates.
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Repatriation taxes Repatriation strategies and multinational financial policy
Social Science Research Network, 2001Co-Authors: Rosanne Altshuler, Harry GrubertAbstract:Several investment-Repatriation strategies are added to the standard model of a multinational in which an affiliate is located in a low-tax country and is limited to two alternatives: repatriating taxable dividends to the parent or investing in its own real operations. In our model, affiliates can invest in passive assets, which the parent can borrow against, or in related affiliates which can be used as vehicles for tax-favored Repatriations. We show analytically how the availability of alternative strategies can effect real investment throughout the worldwide corporation. We use firm level data for U.S. multinationals to test for the importance of alternative strategies. The evidence is generally consistent with the theory, particularly the strategies using related affiliates.
