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In this chapter we analyze how the designation of foreign earnings as “permanently reinvested” outside the US (PRE) is related to subsequent firm growth and market returns. Prior research suggests that firms that hold excess cash in foreign markets to avoid the US corporate income tax experience lower growth, since such “trapped” cash is inefficiently invested. However, foreign earnings can be inefficiently invested in forms other than cash. We hypothesize and find that as the ratio of PRE to total assets increases, firms' growth rates decline. Our results suggest that trapped earnings, and not just trapped cash, are associated with lower growth. Because PRE have also been associated with earnings management in the literature, we further analyze the association between the use of PRE to meet or beat earnings targets and subsequent growth, observing a significant and persistent negative association. Finally, we note that the market discount for PRE, and especially for the use of PRE to manage earnings, appears to be relatively small. Our results provide support for FASB's stated plans to increase disclosure requirements surrounding the tax accrual.

In March 2020, the Australian Government restricted the entry of travelers into Australia by closing its international borders in an effort to contain the spread of the coronavirus (COVID-19). While Australian citizens who were resident overseas could return to Australia under certain conditions, the border closures significantly affected their ability to return to Australia and as a consequence had a dramatic impact on their lives and the lives of their families. This chapter explores the effects of the Australian government’s decision to close the national border by presenting the lived experiences of Australian citizens adversely affected by the government’s decision. The research is based on an online survey conducted in late 2021 and early 2022. Based on the findings, this chapter explores notions of Australian citizenship rights and privileges in the context of the pandemic, and the profound impacts the national lockout had on Australians as individuals, family members and on their sense of national identity. A central finding of this research reveals how citizens’ separation from family during the lockout placed considerable stress on the family as a social institution and caused significant impacts on Australians’ physical and mental health.

In view of the recent enhanced concerns of the SEC and PCAOB that Accounting Principles Board Opinion No. 23 (APB 23)–asserting firms do not comply with the “sufficient evidence” criteria of APB 23, we examine whether APB 23–asserting firms that declared their foreign earnings as permanently reinvested abroad are less likely to repatriate those foreign earnings under the American Jobs Creation Act (AJCA) of 2004, compared with similar non-asserting firms. The asserting firms are required to disclose sufficient evidence that validates an ability to meet their domestic cash needs with only earnings generated in the United States and their plans to indefinitely reinvest foreign earnings outside the United States. Estimates show that asserting firms are more likely to repatriate their foreign earnings than non-asserting firms. In addition, we find that the probability of making an election to repatriate permanently invested foreign earnings under the AJCA of 2004 is higher for firms with nonbinding foreign tax credit (FTC) limitations that have made an APB 23 declaration to permanently invest foreign earnings abroad. These findings suggest that asserting firms’ declarations to indefinitely reinvest foreign earnings abroad are not well grounded, thereby indirectly validating the SEC’s and PCAOB’s increased scrutiny for supporting evidence for APB 23 assertion. The estimates also show that the likelihood of making an election to repatriate foreign earnings under the AJCA of 2004 increases with asserting firms’ liquidity constraints and financial distress: the financial characteristics listed as part of APB 23 criteria of sufficient evidence and highlighted by the SEC and PCAOB comment letters, indicating that asserting firms raid permanently reinvested foreign earnings to satisfy their financial needs and constraints.

I examine patterns of making or deferring strategic repatriations that firms can use to either meet analysts' forecasts or defer to maintain future reported earnings flexibility. First, I examine the extent to which firms repatriate earnings from high foreign tax subsidiaries to decrease US tax expense, resulting in increased net income and lower cash taxes. Using federal tax return information, I find evidence that firms strategically repatriate these earnings to meet or beat current analysts' forecasts. Next, I find evidence that firms that are able to obtain current year tax reductions defer these repatriations in an attempt to build cookie-jar reserves. Lastly, I find that firms do not disclose high foreign tax repatriations (HTRs), even when required by SEC rules. This study contributes to the earnings management, tax avoidance, and disclosure literature by examining a discretionary tax planning strategy.

This study examines whether US effective tax rates on foreign income of US multinationals (MNCs) vary according to the favorability of US macroeconomic conditions relative to those of non-US countries. We use the pre-Tax Cuts and Jobs Act of 2017 regime as our setting and present evidence that US effective tax rates on foreign earnings are higher (lower) in periods when macroeconomic conditions in the US are favorable (unfavorable) relative to those elsewhere in the world. These results imply that firms seek to maximize after-tax returns when making asset allocation decisions, even when faced with US repatriation tax costs. We provide further evidence indicating that our primary results vary predictably according to certain firm characteristics, namely the ability to acquire funds for investment through less expensive means than repatriation of foreign profits, high intangible asset intensity, and tax aggressiveness. Finally, we show that economic uncertainty in the US counters the positive effects of favorable US macroeconomic conditions on US effective tax rates on foreign earnings. Our findings have implications for the policy debate around the US taxation of foreign earnings and provide a (partial) explanation for the observed lower-than-expected levels of repatriation activity following the implementation of the Tax Cuts and Jobs Act of 2017.

Our Dublin correspondent telegraphed last night:

John Andrews Fitch spent a year studying labor conditions in the steel industry around Pittsburgh during 1907 and 1908. The results of his research became The Steel Workers, one of six volumes in the Pittsburgh Survey, a groundbreaking 1910 analysis of conditions faced by working people in a modern industrial city. Introducing his discussion of common employment practices in the steel industry, Fitch declared, “A repressive regime…has served since the destruction of unionism, to keep the employers in the saddle.” He traced the origins of management’s arbitrary power to the Homestead lockout of 1892, when Carnegie Steel destroyed the last stronghold of organized labor in the mills of western Pennsylvania. During his stay in Pittsburgh, Fitch saw the results of fifteen years of management domination. “The steel worker,” he wrote, “sees on every side evidence of an irresistible power, baffling and intangible. It fixes the conditions of his employment; it tells him what wages he may expect to receive and where and when he must work. If he protests, he is either ignored or rebuked. If he talks it over with his fellow workmen, he is likely to be discharged” (Fitch, 1989, pp. 206, 232–233).

This chapter offers a broad view of ways organizations create and sustain social class distinction in the workplace and how these outcomes bolster broader perspectives about socioeconomic status and social class. One’s social class generally refers to earnings, education, or occupational status. In more complex terms, power dynamics create a dichotomy between owners of production forces and workers they employ; a social class structure of haves versus have-nots which organizes human relations. Chapter 9 draws from multiple research traditions to examine the wage labor system, combined with trends, myths and fallacies about social class, social identity intersectionalities, and specifically how social class is performed in organizations.

No matter how much people and their societies prefer to think of themselves as unrestricted and egalitarian, it seems that social class – perhaps more rigidly than any other social identity dimension – offers a ready reminder that social spaces and experiences at work, home, and elsewhere are clearly marked by social class. Key concepts explored include classism, class-free society illusions, and blue- and other color collar metaphors which connote power and privilege. To interrogate social identity research on social class in organizations, explored are subthemes of: socioeconomic status (SES) and the wage labor system in organizations; trends, myths, and fallacies about social class in the United States; intersectionalities of social class identity with age, ethnicity, gender, and physical/psychological ability; and “doing social class” at work.

This paper examines the hypotheses that the length and the depth of the Great Depression were a result of sticky prices or sticky nominal wages using panel data for industrialized and semi-industrialized countries. The results show that price stickiness, particularly, and wage stickiness were key propagating factors during the first years of the Depression. It is found that prices adjusted slowly to wages, particularly in manufacturing. Manufacturing wages are also found to adjust relatively slowly to innovations in prices, but unemployment exerted strong downward pressure on wage growth.