This Article Full Text (PDF) All Versions of this Article: 1091142108320690v1 37/2/170    most recent References Alert me when this article is cited Alert me if a correction is posted Services Email this article to a friend Similar articles in this journal Alert me to new issues of the journal Add to Saved Citations Download to citation manager Request Permissions Request Reprints Add to My Marked Citations Citing Articles Citing Articles via Google Scholar Citing Articles via Scopus Google Scholar Articles by Billings, B. A. Articles by Musazi, B. Search for Related Content Social Bookmarking                         What's this?

How Firms' Foreign Tax Credit Limitation Affects the Amount of Foreign Assets Deployed

Wayne State University

Mbodja Mougoué

Wayne State University

Buagu Musazi

Morgan State University

There is a paucity of research evidence regarding the likely long-term economic consequences of firms' foreign tax credit (FTC) status on asset deployment between the United States and foreign locations. The existing literature primarily focuses on income, not asset, shifting with respect to FTC status. The authors empirically show that after allowing for adjustment costs through Tobin's quotient, assets shift in a direction opposite to the traditional income shift for U.S. multinational corporations with prolonged binding FTC limitation. Regression results for approximately 261 U.S. multinational corporations with various years of missing data for the 1997 through 2003 period indicate that the amount of foreign asset allotment is an increasing function of the duration of firms' FTC limitation spell (cumulative number of the sampled years the firm is FTC limited) for firms in or greater than equilibrium Tobin's quotient.

Key Words: adjustment costs • multinational • foreign tax credit • foreign-sourced income • exports

This version was published on March 1, 2009

Public Finance Review, Vol. 37, No. 2, 170-197 (2009)
DOI: 10.1177/1091142108320690


CiteULike    Complore    Connotea    Del.icio.us    Digg    Reddit    Technorati    Twitter    What's this?