Repatriation Taxes, Internal Agency Conflicts, and Subsidiary-Level Investment Efficiency

• 成果类型: Article
• 署名作者: Amberger, Harald J.; Markle, Kevin S.; Samuel, David M. P.
• 署名单位: Vienna University of Economics & Business; Michigan State University; Michigan State University's Broad College of Business; University of Wisconsin System; University of Wisconsin Madison; Vienna University of Economics & Business
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2019-0259
• 发表日期: 2021
• 页码: 1-25
• 关键词: capital-markets; multinational firms; system reform; trapped cash; INFORMATION; territorial; taxation; COSTS; constraints; FOREIGNNESS

摘要

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 U.K. 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.