I investigate whether US multinational corporations shift income overseas to the point of recording domestic US pretax earnings around zero. I find that firms that face tax incentives to shift and firms that are more aggressive income shifters are more likely to shift all of their earnings out of the US. The economic significance of the effects of tax incentives and aggressive income shifting are large, increasing the likelihood of reporting domestic earnings around zero by as much as 115.7%. The likelihood varies by industry, depending on factors such as reputational costs and the ease of income shifting. In addition, investors value companies reporting low domestic earnings higher than other US multinational firms, conditional on overall profitability, suggesting that on average, investors hold a positive view of shifting to the point of recording domestic earnings around zero.

In this study, I examine whether bank taxation “spills over” onto corporate investment. I use state bank tax rate changes as a quasi-natural experiment and measure corporate investment using the number of establishments and the number of employees of publicly traded firms in a given state in a given year. Using generalized difference-in-differences, I find evidence that bank taxes (1) reduce corporate investment in the taxing jurisdiction (direct spillover effect) and (2) increase corporate investment in non-taxing jurisdictions (indirect spillover effect). In terms of magnitude, I find that rate increases reduce employment and establishments by 8-9% and 4% respectively in the taxing jurisdiction while increasing employment and establishments by roughly 2% and 1% in non-taxing jurisdictions. Rate decreases increase employment and establishments by 2-3% in the taxing jurisdiction while decreasing employment and establishments by 3% and 1%, respectively. To provide evidence on the mechanism at play, I find results consistent with (1) bank taxes reducing lending among banks headquartered in taxing states and (2) bank taxes reducing debt financing and leverage among firms headquartered in taxing states. These results provide evidence that bank taxes affect investment by altering lending.

U.S.-domiciled multinational firms are taxed on a worldwide basis under a credit and deferral system. Consequently, multinationals earning profits from low-tax foreign countries have incentives to delay the repatriation of foreign earnings, resulting in high levels of offshore cash holdings. I hypothesize and find that investors’ valuation of multinationals’ total cash holdings is negatively associated with firm-specific tax costs of repatriation. Using a hand-collected sample of firms that disclose their foreign and domestic cash holdings separately, I find that the documented effect is driven by firms that hold a majority of cash overseas. I propose three explanations for my main finding: (1) repatriation taxes contribute to the buildup of foreign cash that can be subject to agency problems; (2) repatriation taxes make foreign funds less accessible, thereby increasing internal financing frictions; (3) repatriation taxes motivate excessive investments in financial assets, for which the rate of return is usually lower than firms’ cost of capital. Cross-sectional results are consistent with all three explanations. Overall, this study provides new insights into the non-tax costs of multinationals’ sensitivity to taxation.

This study evaluates if the Securities and Exchange Commission’s (SEC’s) disclosure deregulation, i.e., the SEC’s 2018 amendment of definition of Smaller Reporting Companies (SRCs), achieves the goals of reducing compliance costs, promoting firm growth, and protecting investors. Using a difference-in-differences design, I examine the overall usefulness to investors of 10-K filings, firm investment activities, analyst coverage and institutional holding after newly classified SRCs choose to reduce disclosures in 10-Ks, by comparing with three control groups. The findings indicate that although firms reducing disclosures can save compliance costs in terms of audit fees, the saved resources are not transferred into more investment activities. I also find that reducing disclosures does not result in a decrease in the overall usefulness of 10-K filings, it can result in a loss of analyst following and institutional holdings.

The recent Pay Ratio Disclosure mandated by the SEC under the Dodd-Frank Act requires the calculation of the ratio of total annual compensation of the CEO to the total annual compensation of the median rank-and-file employee. The Pay Ratio disclosure is a novel source of information about firm-level vertical pay dispersion. Contemporaneous research on pay dispersion evaluates the direct relationship between pay dispersion and future firm performance or capital market reactions. This paper contributes to the literature by investigating whether employee perceptions are a potential pathway for the relationship between pay dispersion and firm performance. I find that high levels of vertical pay dispersion within a firm are negatively associated with employee perceptions of a firm and labor productivity. I find that higher performance-based variable compensation moderates the negative perceptions and reduced labor productivity associated with high levels of vertical pay dispersion. I also find support for the hypothesis that the Pay Ratio Disclosure is incrementally (and in some cases relatively) more informative than existing disclosures about Executive Compensation with respect to employees and therefore also for researchers interested in the effects of pay dispersion on employees.