Danielle Green investigates how firms use cash their tax savings

Coauthored with Jon Kerr, The Ohio State University

Journal of the American Taxation Association, forthcoming

Professor Green examines how corporations use cash savings generated from tax planning, using an international sample of firms. She finds that firms are more likely to invest cash tax savings or use them to repurchase shares, rather than distribute them in the form of dividends. She finds this behavior varies with the quality of the financial reporting environment within a country. She finds that firms domiciled in countries with poor financial reporting environments are more likely to use these savings to fund investment and pay dividends. Taken together, the results suggest the use of cash tax savings is associated with important firm decisions, and these associations vary across countries.