Investment and Capital Constraints: Repatriations Under the American Jobs Creation Act

  title={Investment and Capital Constraints: Repatriations Under the American Jobs Creation Act},
  author={Michael W. Faulkender and M. Petersen},
  journal={NBER Working Paper Series},
  • Michael W. Faulkender, M. Petersen
  • Published 2009
  • Business
  • NBER Working Paper Series
  • The American Jobs Creation Act (AJCA) significantly lowered US firms' tax cost when accessing their unrepatriated foreign earnings. Using this temporary shock to the cost of internal financing, we examine the role of capital constraints in firms' investment decisions. Controlling for the capacity to repatriate foreign earnings under the AJCA, we find that a majority of the funds repatriated by capital constrained firms were allocated to approved domestic investment. While unconstrained firms… CONTINUE READING
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