Taxes and Financial Assets: Valuing Permanently Reinvested Foreign Earnings
AbstractWe investigate the value of permanently reinvested earnings (PRE) of foreign subsidiaries of U.S. multinationals. We focus particularly on how firm value is affected by reinvesting PRE in financial rather than operating assets, where the reinvestment in financial assets is to avoid the U.S. repatriation tax. Consistent with prior studies, we find that the value of PRE is lower for those firms that disclose a positive U.S. tax associated with repatriation of PRE. Consistent with our hypothesis, we find that this lower value is concentrated in the subset of firms with high amounts of excess cash, our proxy for tax–related reinvestment in financial assets.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by National Tax Association in its journal National Tax Journal.
Volume (Year): 61 (2008)
Issue (Month): 4 (December Citation: 61 National Tax Journal 699-720 (December 2008))
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Charmaine Wright).
If references are entirely missing, you can add them using this form.