In an integrated corporate tax system, resident shareholders receive a tax credit for corporate tax paid that can be used to offset personal tax on dividend income. Nonresident and tax-exempt (pension plan) investors cannot use the tax credit on corporate dividends and thus prefer to invest in...

Prior research has documented a substantial “lockout” effect resulting from the current U.S. worldwide tax and financial reporting systems. We hypothesize that foreign firms are tax- favored acquirers because they can avoid the U.S. tax on repatriations. Consistent with this tax advantage,...

We investigate the association between financial constraints and cash savings generated through tax planning. We predict that an increase in financial constraints leads firms to increase internally-generated funds via tax planning. We measure financial constraints based on changes in...

In this study, we investigate the association between financial constraints, at both the macroeconomic and firm-specific level, and one potentially significant source of internal funds available to firms – cash savings generated through tax planning. In equilibrium a firm will undertake tax...

In a broad sample of publicly traded firms over the period 1988−2017, we observe that the share of firms reporting pre-tax book losses increased from about 20 to 35%. Of those loss firms, on aver-age 68% have positive cash tax payments (taxpaying loss firms). The amount of taxes paid by these...