ALERT: This system is being upgraded on Tuesday December 12. It will not be available for use for several hours that day while the upgrade is in progress. Deposits to DukeSpace will be disabled on Monday December 11, so no new items are to be added to the repository while the upgrade is in progress. Everything should be back to normal by the end of day, December 12.

Show simple item record

Tax-Based Collateral Limitations, Borrowing Arrangements and Firm Value

dc.contributor.advisor Dyreng, Scott D
dc.contributor.advisor Schipper, Katherine A Hills, Robert 2019-06-07T19:48:40Z 2021-05-21T08:17:12Z 2019
dc.description.abstract <p>I examine a tax-related friction that limits U.S. multinational corporations’ ability to use foreign assets as collateral in obtaining U.S. debt financing. I find that tax-based collateral limitations are associated with reduced debt capacity and higher borrowing costs. Additionally, I show that collateral limitations are associated with a decrease in the use of capital covenants and an increase in the use of performance covenants in private debt agreements. While the U.S. House and Senate passed versions of the Tax Cuts and Jobs Act of 2017 that included provisions to eliminate tax-based collateral limitations, the final version surprisingly retained these limitations. I find a negative relation between the extent to which a firm is affected by tax-based collateral limitations and market reactions around the passage of the final version of the Act, suggesting tax-based collateral limitations constrain borrowing arrangements and thereby reduce firm value. The costs associated with these collateral limitations offer one explanation for the under-sheltering puzzle, which suggests firms fail to take advantage of the supposed benefits of tax avoidance strategies.</p>
dc.subject Accounting
dc.subject Collateral
dc.subject Debt
dc.subject Debt Covenants
dc.subject Taxes
dc.title Tax-Based Collateral Limitations, Borrowing Arrangements and Firm Value
dc.type Dissertation
dc.department Business Administration
duke.embargo.months 23

Files in this item


This item appears in the following Collection(s)

Show simple item record