Balance sheets, multinational financial policy, and the cost of capital at home and abroad:
We use data from the balance sheets of controlled foreign corporations,(CFCs) to study the real and financial behavior of U.S. multinational corporations. Previous literature on repatriations has mostly been restricted to the choice between dividend distributions to the parent and further real inves...
Gespeichert in:
| Hauptverfasser: | , |
|---|---|
| Format: | Buch |
| Sprache: | English |
| Veröffentlicht: |
Cambridge, Mass.
1996
|
| Schriftenreihe: | National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series
5810 |
| Schlagworte: | |
| Online-Zugang: | Volltext |
| Zusammenfassung: | We use data from the balance sheets of controlled foreign corporations,(CFCs) to study the real and financial behavior of U.S. multinational corporations. Previous literature on repatriations has mostly been restricted to the choice between dividend distributions to the parent and further real investment in the CFC. The balance sheet data allows us to study a broader range of financial flows between CFCs and parents. Our theoretical work considers models that depart from the previous work in several important ways. We drop the standard arbitrage condition in which the after-tax return to equity and debt is equalized on the margin and instead impose a worldwide financial constraint consistent with a rising cost of debt finance. In our model, parents can borrow against financial assets held abroad and may allocate debt across locations to achieve the lowest cost of capital at home and abroad. We also consider the implications of models in which CFCs can invest in CFCs in other foreign countries. We explain how low-tax CFCs can repatriate tax-free by investing in high-tax CFCs that are repatriating income to parent corporations. Our theoretical results confirm that financial assets, including the equity or debt of other CFCs, are attractive alternatives to repatriation and investment in real assets. We show that if the parent can borrow against its CFC's financial assets it can achieve the equivalent of a dividend repatriation. Our regression results confirm the importance of tax considerations in explaining CFC holdings of financial assets. Low-tax CFCs invest in financial assets in order to avoid U.S. taxes on repatriations. CFCs in high-tax locations are much more highly leveraged than low-tax CFCs. |
| Beschreibung: | 47 S. |
Internformat
MARC
| LEADER | 00000nam a2200000 cb4500 | ||
|---|---|---|---|
| 001 | BV011394981 | ||
| 003 | DE-604 | ||
| 005 | 00000000000000.0 | ||
| 007 | t | ||
| 008 | 970623s1996 xxu |||| 00||| eng d | ||
| 035 | |a (OCoLC)36046966 | ||
| 035 | |a (DE-599)BVBBV011394981 | ||
| 040 | |a DE-604 |b ger |e rakddb | ||
| 041 | 0 | |a eng | |
| 044 | |a xxu |c XD-US | ||
| 049 | |a DE-19 |a DE-521 | ||
| 050 | 0 | |a HB1 | |
| 100 | 1 | |a Altshuler, Rosanne |e Verfasser |0 (DE-588)131401939 |4 aut | |
| 245 | 1 | 0 | |a Balance sheets, multinational financial policy, and the cost of capital at home and abroad |c Rosanne Altshuler ; Harry Grubert |
| 264 | 1 | |a Cambridge, Mass. |c 1996 | |
| 300 | |a 47 S. | ||
| 336 | |b txt |2 rdacontent | ||
| 337 | |b n |2 rdamedia | ||
| 338 | |b nc |2 rdacarrier | ||
| 490 | 1 | |a National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series |v 5810 | |
| 520 | |a We use data from the balance sheets of controlled foreign corporations,(CFCs) to study the real and financial behavior of U.S. multinational corporations. Previous literature on repatriations has mostly been restricted to the choice between dividend distributions to the parent and further real investment in the CFC. The balance sheet data allows us to study a broader range of financial flows between CFCs and parents. Our theoretical work considers models that depart from the previous work in several important ways. We drop the standard arbitrage condition in which the after-tax return to equity and debt is equalized on the margin and instead impose a worldwide financial constraint consistent with a rising cost of debt finance. In our model, parents can borrow against financial assets held abroad and may allocate debt across locations to achieve the lowest cost of capital at home and abroad. We also consider the implications of models in which CFCs can invest in CFCs in other foreign countries. We explain how low-tax CFCs can repatriate tax-free by investing in high-tax CFCs that are repatriating income to parent corporations. Our theoretical results confirm that financial assets, including the equity or debt of other CFCs, are attractive alternatives to repatriation and investment in real assets. We show that if the parent can borrow against its CFC's financial assets it can achieve the equivalent of a dividend repatriation. Our regression results confirm the importance of tax considerations in explaining CFC holdings of financial assets. Low-tax CFCs invest in financial assets in order to avoid U.S. taxes on repatriations. CFCs in high-tax locations are much more highly leveraged than low-tax CFCs. | ||
| 650 | 4 | |a Capital movements | |
| 650 | 4 | |a Corporations, American |x Finance | |
| 650 | 4 | |a Subsidiary corporations |x Finance | |
| 700 | 1 | |a Grubert, Harry |d 1937-2017 |e Verfasser |0 (DE-588)124832490 |4 aut | |
| 776 | 0 | 8 | |i Erscheint auch als |n Online-Ausgabe |
| 830 | 0 | |a National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series |v 5810 |w (DE-604)BV002801238 |9 5810 | |
| 856 | 4 | 1 | |u http://papers.nber.org/papers/w5810.pdf |z kostenfrei |3 Volltext |
| 999 | |a oai:aleph.bib-bvb.de:BVB01-007659908 | ||
Datensatz im Suchindex
| _version_ | 1804125907967803392 |
|---|---|
| any_adam_object | |
| author | Altshuler, Rosanne Grubert, Harry 1937-2017 |
| author_GND | (DE-588)131401939 (DE-588)124832490 |
| author_facet | Altshuler, Rosanne Grubert, Harry 1937-2017 |
| author_role | aut aut |
| author_sort | Altshuler, Rosanne |
| author_variant | r a ra h g hg |
| building | Verbundindex |
| bvnumber | BV011394981 |
| callnumber-first | H - Social Science |
| callnumber-label | HB1 |
| callnumber-raw | HB1 |
| callnumber-search | HB1 |
| callnumber-sort | HB 11 |
| callnumber-subject | HB - Economic Theory and Demography |
| ctrlnum | (OCoLC)36046966 (DE-599)BVBBV011394981 |
| format | Book |
| fullrecord | <?xml version="1.0" encoding="UTF-8"?><collection xmlns="http://www.loc.gov/MARC21/slim"><record><leader>03105nam a2200373 cb4500</leader><controlfield tag="001">BV011394981</controlfield><controlfield tag="003">DE-604</controlfield><controlfield tag="005">00000000000000.0</controlfield><controlfield tag="007">t</controlfield><controlfield tag="008">970623s1996 xxu |||| 00||| eng d</controlfield><datafield tag="035" ind1=" " ind2=" "><subfield code="a">(OCoLC)36046966</subfield></datafield><datafield tag="035" ind1=" " ind2=" "><subfield code="a">(DE-599)BVBBV011394981</subfield></datafield><datafield tag="040" ind1=" " ind2=" "><subfield code="a">DE-604</subfield><subfield code="b">ger</subfield><subfield code="e">rakddb</subfield></datafield><datafield tag="041" ind1="0" ind2=" "><subfield code="a">eng</subfield></datafield><datafield tag="044" ind1=" " ind2=" "><subfield code="a">xxu</subfield><subfield code="c">XD-US</subfield></datafield><datafield tag="049" ind1=" " ind2=" "><subfield code="a">DE-19</subfield><subfield code="a">DE-521</subfield></datafield><datafield tag="050" ind1=" " ind2="0"><subfield code="a">HB1</subfield></datafield><datafield tag="100" ind1="1" ind2=" "><subfield code="a">Altshuler, Rosanne</subfield><subfield code="e">Verfasser</subfield><subfield code="0">(DE-588)131401939</subfield><subfield code="4">aut</subfield></datafield><datafield tag="245" ind1="1" ind2="0"><subfield code="a">Balance sheets, multinational financial policy, and the cost of capital at home and abroad</subfield><subfield code="c">Rosanne Altshuler ; Harry Grubert</subfield></datafield><datafield tag="264" ind1=" " ind2="1"><subfield code="a">Cambridge, Mass.</subfield><subfield code="c">1996</subfield></datafield><datafield tag="300" ind1=" " ind2=" "><subfield code="a">47 S.</subfield></datafield><datafield tag="336" ind1=" " ind2=" "><subfield code="b">txt</subfield><subfield code="2">rdacontent</subfield></datafield><datafield tag="337" ind1=" " ind2=" "><subfield code="b">n</subfield><subfield code="2">rdamedia</subfield></datafield><datafield tag="338" ind1=" " ind2=" "><subfield code="b">nc</subfield><subfield code="2">rdacarrier</subfield></datafield><datafield tag="490" ind1="1" ind2=" "><subfield code="a">National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series</subfield><subfield code="v">5810</subfield></datafield><datafield tag="520" ind1=" " ind2=" "><subfield code="a">We use data from the balance sheets of controlled foreign corporations,(CFCs) to study the real and financial behavior of U.S. multinational corporations. Previous literature on repatriations has mostly been restricted to the choice between dividend distributions to the parent and further real investment in the CFC. The balance sheet data allows us to study a broader range of financial flows between CFCs and parents. Our theoretical work considers models that depart from the previous work in several important ways. We drop the standard arbitrage condition in which the after-tax return to equity and debt is equalized on the margin and instead impose a worldwide financial constraint consistent with a rising cost of debt finance. In our model, parents can borrow against financial assets held abroad and may allocate debt across locations to achieve the lowest cost of capital at home and abroad. We also consider the implications of models in which CFCs can invest in CFCs in other foreign countries. We explain how low-tax CFCs can repatriate tax-free by investing in high-tax CFCs that are repatriating income to parent corporations. Our theoretical results confirm that financial assets, including the equity or debt of other CFCs, are attractive alternatives to repatriation and investment in real assets. We show that if the parent can borrow against its CFC's financial assets it can achieve the equivalent of a dividend repatriation. Our regression results confirm the importance of tax considerations in explaining CFC holdings of financial assets. Low-tax CFCs invest in financial assets in order to avoid U.S. taxes on repatriations. CFCs in high-tax locations are much more highly leveraged than low-tax CFCs.</subfield></datafield><datafield tag="650" ind1=" " ind2="4"><subfield code="a">Capital movements</subfield></datafield><datafield tag="650" ind1=" " ind2="4"><subfield code="a">Corporations, American</subfield><subfield code="x">Finance</subfield></datafield><datafield tag="650" ind1=" " ind2="4"><subfield code="a">Subsidiary corporations</subfield><subfield code="x">Finance</subfield></datafield><datafield tag="700" ind1="1" ind2=" "><subfield code="a">Grubert, Harry</subfield><subfield code="d">1937-2017</subfield><subfield code="e">Verfasser</subfield><subfield code="0">(DE-588)124832490</subfield><subfield code="4">aut</subfield></datafield><datafield tag="776" ind1="0" ind2="8"><subfield code="i">Erscheint auch als</subfield><subfield code="n">Online-Ausgabe</subfield></datafield><datafield tag="830" ind1=" " ind2="0"><subfield code="a">National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series</subfield><subfield code="v">5810</subfield><subfield code="w">(DE-604)BV002801238</subfield><subfield code="9">5810</subfield></datafield><datafield tag="856" ind1="4" ind2="1"><subfield code="u">http://papers.nber.org/papers/w5810.pdf</subfield><subfield code="z">kostenfrei</subfield><subfield code="3">Volltext</subfield></datafield><datafield tag="999" ind1=" " ind2=" "><subfield code="a">oai:aleph.bib-bvb.de:BVB01-007659908</subfield></datafield></record></collection> |
| id | DE-604.BV011394981 |
| illustrated | Not Illustrated |
| indexdate | 2024-07-09T18:09:01Z |
| institution | BVB |
| language | English |
| oai_aleph_id | oai:aleph.bib-bvb.de:BVB01-007659908 |
| oclc_num | 36046966 |
| open_access_boolean | 1 |
| owner | DE-19 DE-BY-UBM DE-521 |
| owner_facet | DE-19 DE-BY-UBM DE-521 |
| physical | 47 S. |
| publishDate | 1996 |
| publishDateSearch | 1996 |
| publishDateSort | 1996 |
| record_format | marc |
| series | National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series |
| series2 | National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series |
| spelling | Altshuler, Rosanne Verfasser (DE-588)131401939 aut Balance sheets, multinational financial policy, and the cost of capital at home and abroad Rosanne Altshuler ; Harry Grubert Cambridge, Mass. 1996 47 S. txt rdacontent n rdamedia nc rdacarrier National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series 5810 We use data from the balance sheets of controlled foreign corporations,(CFCs) to study the real and financial behavior of U.S. multinational corporations. Previous literature on repatriations has mostly been restricted to the choice between dividend distributions to the parent and further real investment in the CFC. The balance sheet data allows us to study a broader range of financial flows between CFCs and parents. Our theoretical work considers models that depart from the previous work in several important ways. We drop the standard arbitrage condition in which the after-tax return to equity and debt is equalized on the margin and instead impose a worldwide financial constraint consistent with a rising cost of debt finance. In our model, parents can borrow against financial assets held abroad and may allocate debt across locations to achieve the lowest cost of capital at home and abroad. We also consider the implications of models in which CFCs can invest in CFCs in other foreign countries. We explain how low-tax CFCs can repatriate tax-free by investing in high-tax CFCs that are repatriating income to parent corporations. Our theoretical results confirm that financial assets, including the equity or debt of other CFCs, are attractive alternatives to repatriation and investment in real assets. We show that if the parent can borrow against its CFC's financial assets it can achieve the equivalent of a dividend repatriation. Our regression results confirm the importance of tax considerations in explaining CFC holdings of financial assets. Low-tax CFCs invest in financial assets in order to avoid U.S. taxes on repatriations. CFCs in high-tax locations are much more highly leveraged than low-tax CFCs. Capital movements Corporations, American Finance Subsidiary corporations Finance Grubert, Harry 1937-2017 Verfasser (DE-588)124832490 aut Erscheint auch als Online-Ausgabe National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series 5810 (DE-604)BV002801238 5810 http://papers.nber.org/papers/w5810.pdf kostenfrei Volltext |
| spellingShingle | Altshuler, Rosanne Grubert, Harry 1937-2017 Balance sheets, multinational financial policy, and the cost of capital at home and abroad National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series Capital movements Corporations, American Finance Subsidiary corporations Finance |
| title | Balance sheets, multinational financial policy, and the cost of capital at home and abroad |
| title_auth | Balance sheets, multinational financial policy, and the cost of capital at home and abroad |
| title_exact_search | Balance sheets, multinational financial policy, and the cost of capital at home and abroad |
| title_full | Balance sheets, multinational financial policy, and the cost of capital at home and abroad Rosanne Altshuler ; Harry Grubert |
| title_fullStr | Balance sheets, multinational financial policy, and the cost of capital at home and abroad Rosanne Altshuler ; Harry Grubert |
| title_full_unstemmed | Balance sheets, multinational financial policy, and the cost of capital at home and abroad Rosanne Altshuler ; Harry Grubert |
| title_short | Balance sheets, multinational financial policy, and the cost of capital at home and abroad |
| title_sort | balance sheets multinational financial policy and the cost of capital at home and abroad |
| topic | Capital movements Corporations, American Finance Subsidiary corporations Finance |
| topic_facet | Capital movements Corporations, American Finance Subsidiary corporations Finance |
| url | http://papers.nber.org/papers/w5810.pdf |
| volume_link | (DE-604)BV002801238 |
| work_keys_str_mv | AT altshulerrosanne balancesheetsmultinationalfinancialpolicyandthecostofcapitalathomeandabroad AT grubertharry balancesheetsmultinationalfinancialpolicyandthecostofcapitalathomeandabroad |