Do Foreign Multinationals' Tax Incentives Influence Their U.S. Income Reporting and Debt Policy?

Posted: 1 May 2004

See all articles by Lillian F. Mills

Lillian F. Mills

University of Texas at Austin - McCombs School of Business

Kaye J. Newberry

University of Arizona - Department of Accounting

Abstract

Using a matched sample of financial data on foreign multinationals and confidential income tax return data on U.S. foreign-controlled corporations (FCCs) during 1987-1996, we examine whether the tax incentives of foreign multinationals influence their U.S. tax reporting. We find that foreign multinationals with relatively low average foreign tax rates report less taxable income and use more debt in their FCCs than those with relatively high average foreign tax rates. Our findings provide insights regarding the complex reporting behavior of FCCs and have implications for U.S. tax policy.

Suggested Citation

Mills, Lillian F. and Newberry, Kaye J., Do Foreign Multinationals' Tax Incentives Influence Their U.S. Income Reporting and Debt Policy?. Available at SSRN: https://ssrn.com/abstract=538064

Lillian F. Mills (Contact Author)

University of Texas at Austin - McCombs School of Business ( email )

Austin, TX 78712
United States

Kaye J. Newberry

University of Arizona - Department of Accounting ( email )

Tucson, AZ 85721
United States
520-621-1252 (Phone)
520-621-3742 (Fax)

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