Understanding the Rise in Corporate Cash: Precautionary Savings or Foreign Taxes

• 成果类型: Article
• 署名作者: Faulkender, Michael W.; Hankins, Kristine W.; Petersen, Mitchell A.
• 署名单位: University System of Maryland; University of Maryland College Park; University of Kentucky; Northwestern University; National Bureau of Economic Research
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhz003
• 发表日期: 2019
• 页码: 3299
• 关键词: US FIRMS HOLD; INVESTMENT; income

摘要

What has driven the dramatic rise in U.S. corporate cash? Using non-public data, we show that the run-up is not uniform across firms but is concentrated in the foreign subsidiaries of multinational firms. Standard precautionary motives explain only domestic cash holdings, not these burgeoning foreign cash balances. Falling foreign tax rates, coupled with relaxed restrictions on income shifting, are the root of the changing foreign cash patterns. Firms with intellectual property have the greatest ability to shift income to low tax jurisdictions, and their foreign subsidiaries are where we observe the largest accumulations of cash.