U.S. multinational corporations' income shifting incentives and share repurchases: Evidence across differential taxation systems

IF 5.5 2区经济学 Q1 BUSINESS, FINANCE

Global Finance Journal Pub Date : 2024-04-04 DOI:10.1016/j.gfj.2024.100966

Baban Eulaiwi , Fatmah Saeed Alghamdi , Ahmed Al-Hadi , Lien Duong , Grantley Taylor

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Abstract

This study examines the association between income-shifting incentives and share repurchases using a sample of US multinational corporations (MNCs) from 2006 to 2020. We find a significant negative (positive) association between income shifting and share repurchases before (after) the enactment of the Tax Cuts and Jobs Act (TCJA) in 2018. The results show that the TCJA only had a short-term effect on the relation between income shifting and share repurchases that was largely confined to 2018 and reverted to pre-TCJA levels in subsequent years. Additionally, the overall negative relationship between income shifting and share repurchases is stronger in firms with high repatriation costs. However, firms with an advance pricing agreement with the Internal Revenue Service evidence a positive association between income shifting and share repurchases. Overall, we provide evidence for the effects of taxation system reforms on MNCs' income-shifting incentives and share repurchase decisions.

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美国跨国公司的收入转移动机与股票回购：不同税制下的证据

本研究以 2006 年至 2020 年的美国跨国公司（MNC）为样本，考察了收入转移激励与股票回购之间的关联。我们发现，在 2018 年《减税与就业法案》（TCJA）颁布之前（之后），收入转移与股票回购之间存在明显的负（正）关联。结果表明，TCJA 只对收入转移与股票回购之间的关系产生了短期影响，这种影响主要局限于 2018 年，随后几年又恢复到了 TCJA 颁布前的水平。此外，收入转移与股票回购之间的整体负相关关系在回流成本较高的企业中更为强烈。然而，与美国国内税收署签订了预先定价协议的公司则证明收入转移与股票回购之间存在正相关关系。总之，我们提供了税制改革对跨国公司收入转移动机和股票回购决策影响的证据。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Global Finance Journal BUSINESS, FINANCE-

CiteScore

7.30

自引率

13.50%

发文量

106

审稿时长

53 days

期刊介绍： Global Finance Journal provides a forum for the exchange of ideas and techniques among academicians and practitioners and, thereby, advances applied research in global financial management. Global Finance Journal publishes original, creative, scholarly research that integrates theory and practice and addresses a readership in both business and academia. Articles reflecting pragmatic research are sought in areas such as financial management, investment, banking and financial services, accounting, and taxation. Global Finance Journal welcomes contributions from scholars in both the business and academic community and encourages collaborative research from this broad base worldwide.