|
Taxes and Investment Opportunities: Valuing Permanently Reinvested Foreign Earnings
Lisa Bryant - Kutcher, University of Oregon
David A. Guenther, University of Oregon
Lisa Hersrud, University of Oregon
ABSTRACT. We investigate the value of permanently reinvested foreign earnings (PRE) of U.S. multinationals, focusing particularly on the valuation impact of reinvesting PRE in financial rather than operating assets, where the reinvestment in financial assets is to avoid U.S. income taxes. 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. However, 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.
Full-Text is no longer available online. Please contact the author(s) for more information about this manuscript.
Back to Session Listing
|