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Foreign Exposure Level And The Impact Of The 2017 Tax Cuts And Jobs Act On Valuation Of Us Multinational Companies

Gow‐Cheng Huang et al.

Accounting and Taxation2020article
ABDC C
Weight
0.46

What the paper says

U.S. multinational corporations conduct a significant amount of their business and book a significant portion of their sales and profits in foreign countries. Prior to the passage of the Tax Cuts and Jobs Act, which was signed into law by President Trump on December 22, 2017, income generated by US multinational corporations was not subject to US taxation until repatriated to the US. The Tax Cuts and Jobs Act reduced US corporate tax rates, changed the corporate taxation of US multinational corporations to a territorial system, and created an immediate tax liability for US multinationals’ deemed repatriation of their past foreign earnings. This study examines the impact of these complex changes to the US corporate tax system on the short-term valuation of US multinational firms. Our results indicate the Tax Cuts and Jobs Act had a net negative impact on US multinational corporations’ valuation in the short-term, with higher levels of foreign exposure leading to lower returns. Our results are robust to alternate measures of foreign exposure and abnormal returns.

6 citations

Cite this paper

@article{gow‐cheng2020,
  title        = {{Foreign Exposure Level And The Impact Of The 2017 Tax Cuts And Jobs Act On Valuation Of Us Multinational Companies}},
  author       = {Gow‐Cheng Huang et al.},
  journal      = {Accounting and Taxation},
  year         = {2020},
}

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Evidence weight

0.46

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.28 × 0.4 = 0.11
M · momentum0.80 × 0.15 = 0.12
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.