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| Author: | Foley, C.F. (et al.) |
| Title: | Why do firms hold so much cash? A tax-based explanation |
| Journal: | Journal of Financial Economics
2007 : DEC, VOL. 86:3, p. 579-607 |
| Index terms: | finance taxation cash flow companies USA |
| Freeterms: | repatriation |
| Language: | eng |
| Abstract: | This paper develops and tests the hypothesis that the magnitude of U.S. multinational cash holdings are, in part, a consequence of the tax costs associated with repatriating (here as: reptn.) foreign income. Firms facing higher reptn. taxes hold higher levels of cash, hold this cash abroad and in affiliates that trigger high tax costs when reptn. earnings. In addition, less financially constrained firms and more technology intensive firms exhibit a higher sensitivity of affiliate cash holdings to reptn. tax burdens. |
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