On April 7, Jennifer Blouin (University of Pennsylvania, Wharton School) presented Is U.S. Multinational Intra-Firm Dividend Policy Influenced By Reporting Incentives? (with Linda K. Krull (University of Oregon, Lundquist College of Business) & Leslie A. Robinson (Dartmouth College, Tuck School of Business)) at the NYU Tax Policy Colloquium convened by Daniel Shaviro (NYU) and Mihir Desai (Harvard Business School). Here is the abstract:
This study finds evidence that public-company reporting by U.S. multinational corporations (MNCs) creates disincentives to repatriate foreign earnings. MNCs operate under U.S. international tax laws and financial reporting rules and face two potential consequences when they repatriate foreign earnings: a cash payment for repatriation tax and a reduction in reported accounting earnings. Using a confidential dataset of financial and operating characteristics of foreign affiliates of MNCs combined with public company data over a six year period, we find evidence that reporting incentives have a negative effect on the amount of foreign earnings repatriated by MNCs. This is the first empirical study of repatriation amounts to show that financial reporting is an important factor in the repatriation decision of U.S. MNCs.