'Competitiveness' Has Nothing to Do With It

Abstract:

The recent wave of corporate tax inversions has triggered interest in what motivates these tax-driven transactions now. Corporate executives have argued that inversions are explained by an "anti-competitive" U.S. tax environment, as evidenced by the federal corporate tax statutory rate, which is high by international standards, and by its "worldwide" tax base. This paper explains why this competitiveness narrative is largely fact-free, in part by using one recent articulation of that narrative (by Emerson Electric Co.’s former vice-chairman) as a case study.

The recent surge in interest in inversion transactions is explained primarily by U.S. based multinational firms’ increasingly desperate efforts to find a use for their stockpiles of offshore cash (now totaling around $1 trillion), and by a desire to "strip" income from the U.S. domestic tax base through intragroup interest payments to a new parent company located in a lower-taxed foreign jurisdiction. These motives play out against a backdrop of corporate existential despair over the political prospects for tax reform, or for a second "repatriation tax holiday" of the sort offered by Congress in 2004.

Source: Social Science Research Network

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How Does Government Borrowing Affect Corporate Financing and Investment?

Abstract:

Using a novel dataset of accounting and market information that spans most publicly traded nonfinancial firms over the last century, we show that U.S. federal government debt issuance significantly affects corporate financial policies and balance sheets through its impact on investors’ portfolio allocations and the relative pricing of different assets. Government debt is strongly negatively correlated with corporate debt and investment, but strongly positively correlated with corporate liquidity. These relations are more pronounced in larger, less risky firms whose debt is a closer substitute for Treasuries. Indeed, we find a strong negative relation between the BAA-AAA yield spread and government debt, highlighting the greater sensitivity of more highly rated credit to variation in the supply of Treasuries. The channel through which this effect operates is investors’ portfolio decisions: domestic intermediaries actively substitute between lending to the federal government and the nonfinancial corporate sector. The relations between government debt and corporate policies, as well as the substitution between government and corporate debt by intermediaries, are stronger after 1970 when foreign demand increased competition for Treasury securities. In concert, our results suggest that large, financially healthy corporations act as liquidity providers by supplying relatively safe securities to investors when alternatives are in short supply, and that this financial strategy influences firms’ capital structures and investment policies.

Source:National Bureau of Economic Research via Social Science Research Network

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Big Data and the Future for Privacy

Abstract:

In our inevitable big data future, critics and skeptics argue that privacy will have no place. We disagree. When properly understood, privacy rules will be an essential and valuable part of our digital future, especially if we wish to retain the human values on which our political, social, and economic institutions have been built. In this paper, we make three simple points. First, we need to think differently about “privacy.” Privacy is not merely about keeping secrets, but about the rules we use to regulate information, which is and always has been in intermediate states between totally secret and known to all. Privacy rules are information rules, and in an information society, information rules are inevitable. Second, human values rather than privacy for privacy’s sake should animate our information rules. These must include protections for identity, equality, security, and trust. Third, we argue that privacy in our big data future can and must be secured in a variety of ways. Formal legal regulation will be necessary, but so too will “soft” regulation by entities like the Federal Trade Commission, and by the development of richer notions of big data ethics.

Source: Social Science Research Network

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An Emerging Fact-Finding Discipline? A Conceptual Roadmap for Social Science Methods in Human Rights Advocacy

Abstract:

Human rights advocates seek to find, interpret, and communicate facts about rights violations amidst some of the most complex social, economic, and political circumstances. To meet these challenges, fact-finders have developed research procedures that increasingly draw on a wide range of interdisciplinary tools and perspectives — with a notable expansion in the use of qualitative and quantitative methods from social science during recent years. Yet there is little discussion of investigative principles, research components, and methodological standards in the human rights field — a reality that often fuels tension and uncertainty over the extent to which social scientific research standards can and should inform evolving fact-finding conventions. As a result, fundamental questions about such standards remain unaddressed. To fill this gap, this chapter offers three core contributions. First, this chapter contextualizes the discussion by presenting data concerning the methods and conventions used by researchers at Amnesty International and Human Rights Watch in the years 2000 and 2010. Second, this chapter interrogates the nature of social scientific inquiry and the degree of overlap between social science research and human rights fact-finding by comparing investigative principles, research components, and methodological standards. These comparisons reveal that social scientific research and human rights fact-finding share many common foundations and suggest that there is great potential for further convergence — especially in relation to methodological transparency. Third, drawing on some of the key distinctions between social science research and human rights fact-finding, this chapter highlights some of the methodological trade-offs that human rights investigators will likely confront when more directly considering social scientific strategies. This chapter ultimately cautions against the creation of a social science of human rights fact-finding, given the unique challenges and irreducible ethical commitments of human rights fact-finding. It instead calls for open and inclusive conversations about the most promising and appropriate standards for the evolving practice of human rights fact-finding.

Source: Social Science Research Network
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