Why do firms hold so much cash? A tax-based explanation

• 成果类型: Article
• 署名作者: Foley, C. Fritz; Hartzell, Jay C.; Titman, Sheridan; Twite, Garry
• 署名单位: University of Texas System; University of Texas Austin; Harvard University; Australian National University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2006.11.006
• 发表日期: 2007
• 页码: 579-607
• 关键词: Cash; taxes; Repatriation

摘要

US corporations hold significant amounts of cash on their balance sheets. This paper develops and tests the hypothesis that the magnitude of US multinational cash holdings are, in part, a consequence of the tax costs associated with repatriating foreign income. Consistent with this hypothesis, firms facing higher repatriation taxes hold higher levels of cash, hold this cash abroad, and hold this cash in affiliates that trigger high tax costs when repatriating earnings. In addition, less financially constrained firms and those that are more technology intensive exhibit a higher sensitivity of affiliate cash holdings to repatriation tax burdens. (c) 2007 Elsevier B.V. All rights reserved.