Small business of in-interest takeaways in the study of reported cash holdings and size – kind of company ratio.
Excerpt: We find that U.S. multinationals held comparable amounts of cash than purely domestic firms in the late 1990s, but now hold significantly more cash than similar purely domestic firms. Since the increase in cash holdings of U.S. firms is concentrated among multinational firms, we investigate why the cash holdings of U.S. multinationals increased so much and whether the increase is explained by the tax treatment of repatriations. Foley, Hartzell, Titman, and Twite (2007) show that the tax treatment of remittances makes it advantageous for multinationals to keep their earnings abroad and they find that firms for which repatriation is more costly hold more cash. Our findings suggest that the tax costs of repatriation are not the whole story for the increase in cash holdings of U.S. multinationals in the 2000s