U.S.companies have been carrying more cast ever since the global financial crisis of 2008. According to recent Flow of Funds estimates U.S. non financial corporations are sitting on an regate cash and marketable securities position of close to $4 trillion. Largest companies in the S&P 500 index, including communications services plant Alphabet (GOOGL), and technology stalwarts Apple (AAPL) and Microsoft (MSFT), each hold a lon's share of this cath stockpile. The cash tash of Canadian non financial firm has been increasing as well Cash ratio for SAP 500 350 300 200 200 100 100420 2006 2007 2008 2008 2010 2011 2012 2013 2014 2015 2016 207 208 209 2020 www Althed son GAP der 2000 CatW There are many posible reasons for why companies aren't spending more glven their vast reserves, and we talked about these in class. We discussed that precautionary motives are an important factor in a firm's decision to hold cash. However, precautionary motives only explain the cross sectional variation in domestic cash. A majority of the rise in total cash and 85% of there in the cash held toy multinational corporations (MNCs) is due to a rise in MNC foreign cash. This rhe in foreign cash is driven by tax tactors As foreign tax rates fell below us: rates, there has been an incentive not only to delay the repatriation of foreign income, but also to shift income into lower tax jurisdictions In this discussion tosk you to think about the long-term effects of this on company balance sheets as well as on the overall economy. I there a danger for the economy from firme dechiant n to hoard cashShould governments intervene and incentivite companies to repatriate funds held overseas? Source: The Review of Financial Studies article by Faulkender, Hankins, and Petersen U.S.companies have been carrying more cast ever since the global financial crisis of 2008. According to recent Flow of Funds estimates U.S. non financial corporations are sitting on an regate cash and marketable securities position of close to $4 trillion. Largest companies in the S&P 500 index, including communications services plant Alphabet (GOOGL), and technology stalwarts Apple (AAPL) and Microsoft (MSFT), each hold a lon's share of this cath stockpile. The cash tash of Canadian non financial firm has been increasing as well Cash ratio for SAP 500 350 300 200 200 100 100420 2006 2007 2008 2008 2010 2011 2012 2013 2014 2015 2016 207 208 209 2020 www Althed son GAP der 2000 CatW There are many posible reasons for why companies aren't spending more glven their vast reserves, and we talked about these in class. We discussed that precautionary motives are an important factor in a firm's decision to hold cash. However, precautionary motives only explain the cross sectional variation in domestic cash. A majority of the rise in total cash and 85% of there in the cash held toy multinational corporations (MNCs) is due to a rise in MNC foreign cash. This rhe in foreign cash is driven by tax tactors As foreign tax rates fell below us: rates, there has been an incentive not only to delay the repatriation of foreign income, but also to shift income into lower tax jurisdictions In this discussion tosk you to think about the long-term effects of this on company balance sheets as well as on the overall economy. I there a danger for the economy from firme dechiant n to hoard cashShould governments intervene and incentivite companies to repatriate funds held overseas? Source: The Review of Financial Studies article by Faulkender, Hankins, and Petersen