Is U.S. Multinational Dividend Repatriation Policy Influenced by Reporting Incentives?

Posted: 20 Sep 2009 Last revised: 17 May 2012

See all articles by Jennifer Blouin

Jennifer Blouin

University of Pennsylvania - Accounting Department

Linda K. Krull

University of Oregon

Leslie A. Robinson

Dartmouth College - Tuck School of Business; Dartmouth College - Accounting

Date Written: January 25, 2012

Abstract

This study finds evidence that public-company reporting by U.S. multinational corporations (MNCs) creates disincentives to repatriate foreign earnings to the U.S. and contributes to the accumulation of cash abroad. 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 taxes 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, we examine how repatriation amounts vary across firms that face relatively strong reporting incentives to defer an accounting expense. Our results suggest that reporting incentives reduce repatriations by about 17 to 21 percent annually.

Keywords: repatriation policy, reporting incentives, international tax policy

JEL Classification: H87, M41

Suggested Citation

Blouin, Jennifer and Krull, Linda K. and Robinson, Leslie, Is U.S. Multinational Dividend Repatriation Policy Influenced by Reporting Incentives? (January 25, 2012). Accounting Review, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1468135 or http://dx.doi.org/10.2139/ssrn.1468135

Jennifer Blouin

University of Pennsylvania - Accounting Department ( email )

1315 SHDH
3620 Locust Walk
Philadelphia, PA 19104-6365
United States
215-898-1266 (Phone)

Linda K. Krull

University of Oregon ( email )

1208 University of Oregon
Eugene, OR 97403-1208
United States
541-346-3252 (Phone)

Leslie Robinson (Contact Author)

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States

Dartmouth College - Accounting ( email )

100 Tuck Hall
Hanover, NH 03755
United States
603-646-4018 (Phone)

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