Suchergebnisse

ABSTRACT
The CEO of Auto Financial Inc. has just learned of a new tax incentive, the Save Taxes by Adding and Retaining (STAR) Act, and she is considering hiring some new employees. As the current controller of Auto Financial Inc., your assignment is to read the relevant portion of STAR and to quantify the value of any tax benefits that Auto Financial, Inc. would receive if the CEO chooses to hire the five new employees. This case requires you to apply a rule of the Internal Revenue Code (IRC) to a practical business situation. As you complete the case you will become more comfortable with reading and interpreting IRC rules and applying them in business settings. You will also become more familiar with common payroll withholding categories and you will gain experience writing tax-related memoranda.

Purpose
The purpose of this study is to empirically identify incentives that drive resource shifting by US pharmaceutical firms to comparatively low-tax jurisdictions.


Design/methodology/approach
Using a panel of publicly listed companies, we investigate whether resource shifting is facilitated by two underlying factors. First, we examine whether pharmaceutical manufacturers whose intangible assets are disproportionately held as intellectual property are more or less likely to shift resources to jurisdictions outside of the USA. Second, we empirically determine whether manufacturers that derive most of their revenues from producing a specific type of product are more or less likely to shift income-producing resources to their international affiliates.


Findings
The empirical results suggest that pharmaceutical factors do practice strategic resource shifting. Moreover, pharmaceutical manufacturers which produce biologic medications are significantly less likely than other manufacturers to practice resource shifting. We find no evidence to suggest that firms whose intangible assets are more composed of intellectual property are any more or less likely to practice resource shifting.


Originality/value
To date, a plethora of studies exist which examine resource shifting in a large, general population of multinational corporations. However, there are relatively few studies that examine international resource shifting in the pharmaceutical industry.