R&D and the Rising Foreign Profitability of US Multinational Corporations

• 成果类型: Article
• 署名作者: De Simone, Lisa; Huang, Jingjing (Jing); Krull, Linda K.
• 署名单位: Stanford University; Virginia Polytechnic Institute & State University; University of Oregon
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-52620
• 发表日期: 2020
• 页码: 177-204
• 关键词: INTELLECTUAL PROPERTY; developing-countries; income; taxes; incentives; INVESTMENT; INNOVATION; RIGHTS

摘要

We investigate how R&D contributes to rising foreign profitability in U.S. multinational corporations through wage and tax incentives. Our results suggest that wage savings increase foreign profit margins derived from foreign R&D, while tax incentives increase foreign profit margins derived from domestic R&D. By exploring their relative importance, we find that wage savings are more important than tax incentives in explaining foreign profit margins when the wage discount substantially exceeds tax incentives, and vice versa. Cross-sectional tests show that firms respond more to foreign R&D wage savings when they have access to local human talent, but less as the cost of conducting foreign R&D increases. Firms respond less to tax incentives to shift income derived from domestic R&D as transfer pricing risk increases. Our evidence sheds light on the importance of R&D-related income shifting that potentially separates the location of economic activity from the location of income.