tl;dr: Multinational corporations hold cash in foreign subsidiaries to avoid paying taxes on profits, and would get taxed on those profits if they bring them b

tl;dr: Multinational corporations hold cash in foreign subsidiaries to avoid paying taxes on profits, and would get taxed on those profits if they bring them back into the U.S. (repatriate the profits). This study shows the following: - Firms that face higher repatriation tax burdens hold higher levels of cash, hold this cash abroad, and hold this cash in affiliates that trigger high tax costs when repatriating earnings. - Estimates indicate that a one standard deviation increase in the tax burden from repatriating foreign income is associated with a 7.9% increase in the ratio of cash to net assets.