US multinationals and cash holdings

• 成果类型: Article
• 署名作者: Gu, Tiantian
• 署名单位: Northeastern University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2017.05.007
• 发表日期: 2017
• 页码: 344-368
• 关键词: CASH HOLDINGS; multinationals; Intangibles; structural estimation

摘要

U.S. multinational firms hold significantly more cash than domestic firms. I study this cash differential using a dynamic model featuring corporate physical and intangible investment, cross-border decisions, and financial policies. I find that the cash differential diminishes by 42% if repatriation costs are set to zero. Hence, costly repatriation induces cash accumulation offshore. Further, firms that invest overseas have different ex ante cash policies from firms that do not. I examine this self-selection effect by elimiriating heterogeneous intangibility across multinational and domestic firms, which reduces the cash differential by 28%. 1 also examine the likelihood of corporate inversion under federal regulations. The estimated annual tax loss to the U.S. Treasury from inversions is reduced from $2.2 billion to $1.3 billion if the requirements for foreign ownership are tightened from 20% to 50%. (C) 2017 Elsevier B.V. All rights reserved.