NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Why do firms hold so much cash? A tax-based explanation

C. Fritz Foley, Jay C. Hartzell, Sheridan Titman, Garry Twite

NBER Working Paper No. 12649
Issued in October 2006

---- Acknowledgements -----

The statistical analysis of firm-level data on U.S. multinational companies was conducted at the International Investment Division, Bureau of Economic Analysis, U.S. Department of Commerce under arrangements that maintain legal confidentiality requirements. The views expressed are those of the authors and do not reflect official positions of the U.S. Department of Commerce. The authors thank Amy Dittmar, Linda Krull, Ed Outslay, Brad McPhail, John Robinson, Connie Weaver, and seminar participants at the 2006 American Finance Association Meetings, Australian Graduate School of Management, Chinese University of Hong Kong, the 2005 Tax Symposium at the University of North Carolina at Chapel Hill, and the University of Texas at Austin. We would also like to thank John Graham for supplying tax rate data. All errors are our own. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.

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