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Welcome Home to Japan: Repatriation of Foreign Profits by Japanese Multinationals

  • Tajika, Eiji
  • Nakatani, Ryota

The empirical literature suggests that repatriation decisions of U.S. multinational corporations are influenced by taxes. Although the U.S. and Japan adopt the same foreign tax credit system, we have found no evidence that corporate taxes have significantly affected dividend repatriation of Japanese multinationals. Instead, we have found that almost half of Japanese foreign affiliates pay dividends and their average marginal dividend payout rate is about twenty percent. The results also suggest that the repatriation behavior varies across industries and countries. Furthermore, parent companies' financial status is found to influence the profit remittance of their foreign affiliates.

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File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/16994/1/070econDP08-04.pdf
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Paper provided by Graduate School of Economics, Hitotsubashi University in its series Discussion Papers with number 2008-04.

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Length: 32 p.
Date of creation: Mar 2008
Date of revision:
Handle: RePEc:hit:econdp:2008-04
Note: March 31, 2008
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Web page: http://www.econ.hit-u.ac.jp/

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  1. Brandon Julio & David L. Ikenberry, 2004. "Reappearing Dividends," Journal of Applied Corporate Finance, Morgan Stanley, vol. 16(4), pages 89-100.
  2. Mihir A. Desai & C. Fritz Foley & James R. Hines Jr., 2002. "Dividend Policy inside the Firm," NBER Working Papers 8698, National Bureau of Economic Research, Inc.
  3. Power, Laura & Silverstein, Gerald, 2007. "The Foreign Source Income Repatriation Patterns of US Parents in Worldwide Loss," National Tax Journal, National Tax Association, vol. 60(3), pages 537-49, September.
  4. Rosanne Altshuler & T. Scott Newlon, 1991. "The Effects of U.S. Tax Policy on the Income Repatriation Patterns of U.S. Multinational Corporations," NBER Working Papers 3925, National Bureau of Economic Research, Inc.
  5. Alan Auerbach & Michael P Devereux & Helen Simpson, 2007. "Taxing corporate income," Working Papers 0705, Oxford University Centre for Business Taxation.
  6. Desai, Mihir A. & Hines, James R. Jr., 2003. "Evaluating International Tax Reform," National Tax Journal, National Tax Association, vol. 56(3), pages 487-502, September.
  7. Rosanne Altshuler & Harry Grubert, 2002. "Where will they go if we go territorial? Dividend exemption and the location decisions of U.S. multinational corporations," Departmental Working Papers 200201, Rutgers University, Department of Economics.
  8. Altshuler, Rosanne & Grubert, Harry, 2003. "Repatriation taxes, repatriation strategies and multinational financial policy," Journal of Public Economics, Elsevier, vol. 87(1), pages 73-107, January.
  9. James R. Hines, Jr. & R. Glenn Hubbard, 1989. "Coming Home to America: Dividend Repatriations by U.S. Multinationals," NBER Working Papers 2931, National Bureau of Economic Research, Inc.
  10. Desai, Mihir A. & Foley, C. Fritz & Hines, James R. Jr., 2001. "Repatriation Taxes and Dividend Distortions," National Tax Journal, National Tax Association, vol. 54(n. 4), pages 829-51, December.
  11. Fritz Foley, C. & Hartzell, Jay C. & Titman, Sheridan & Twite, Garry, 2007. "Why do firms hold so much cash? A tax-based explanation," Journal of Financial Economics, Elsevier, vol. 86(3), pages 579-607, December.
  12. Desai, Mihir A. & Hines, James R. Jr., 2004. "Old Rules and New Realities: Corporate Tax Policy in a Global Setting," National Tax Journal, National Tax Association, vol. 57(4), pages 937-60, December.
  13. Peter J. Mullins, 2006. "Moving to Territoriality? Implications for the United States and the Rest of the World," IMF Working Papers 06/161, International Monetary Fund.
  14. Eika Yamaguchi, 2004. "Recent Characteristics of Royalties and License Fees in Japan's Balance of Payments," Bank of Japan Working Paper Series 04-E-5, Bank of Japan.
  15. Graetz, Michael J. & Oosterhuis, Paul W., 2001. "Structuring an Exemption System for Foreign Income of U.S. Corporations," National Tax Journal, National Tax Association, vol. 54(n. 4), pages 771-86, December.
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