@techreport{NBERw5755,
 title = ""Basket" Cases: International Joint Ventures After the Tax Reform Act of 1986",
 author = "Mihir A. Desai and James R. Hines, Jr.",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "5755",
 year = "1996",
 month = "September",
 URL = "http://www.nber.org/papers/w5755",
 abstract = {This paper examines the impact of the Tax Reform Act of 1986 (TRA) on international joint ventures by American firms.  The evidence suggests that the TRA had a significant effect on the organizational form of U.S. business activity abroad.  The TRA mandates the use of separate credits on income received from foreign corporations owned 50% or less by Americans.  This limitation on worldwide averaging greatly reduces the attractiveness of joint ventures to American investors, particularly ventures in low-tax foreign countries. Aggregate data indicate that U.S. participation in international joint ventures fell sharply after 1986.  The decline in U.S. joint venture activity is most pronounced in low-tax countries, which is consistent with the incentives created by the TRA. Moreover, joint ventures in low-tax countries use more debt and pay greater royalties to their U.S. parents after 1986, which reflects their incentives to economize on dividend payments},
}