The Comovement of Returns and Investment Within the Multinational Firm

Can financial integration, particularly the cross-border investments of multinational firms, help explain the synchronization of business cycles? This paper presents evidence on the comovement of returns and investment within U.S. multinational firms to address this question. These firms constitute significant fractions of economic output and investment in most large economies, suggesting that they could create significant economic linkages. Aggregate measures of rates of return and investment rates of U.S. multinational firms located in different countries are highly correlated across countries. Firm-level regressions demonstrate that rates of return and investment rates of affiliates are highly correlated with the rates of return and investment of the affiliate's parent and other affiliates within the same parent system, controlling for country and industry factors. The evidence on these interrelationships and the importance of multinationals to local economies suggests that global firms may be an important channel for transmitting economic shocks. This evidence also sheds light on asset pricing puzzles related to the diversification benefits provided by multinational firms.

A MEMS electrostatic particle transportation system

We demonstrate here an electrostatic MEMS system capable of transporting particles 5-10μm in diameter in air. This system consists of 3-phase electrode arrays covered by insulators (Figs. 1, 2). Extensive testing of this system has been done using a variety of insulation materials (silicon nitride, photoresist, and Teflon), thickness (0- 12μm), particle sizes (1-10μm), particle materials (metal, glass, polystyrene, spores, etc), waveforms, frequencies, and voltages. Although previous literature [1-2] claimed it impractical to electrostatically transport particles with sizes 5-10μm due to complex surface forces, this effort actually shows it feasible (as high as 90% efficiency) with the optimal combination of insulation thickness, electrode geometry, and insulation material. Moreover, we suggest a qualitative theory for our particle transportation system which is consistent with our data and finite-element electrostatic simulations

Ultracold neutron depolarization in magnetic bottles

We analyze the depolarization of ultracold neutrons confined in a magnetic field configuration similar to those used in existing or proposed magneto-gravitational storage experiments aiming at a precise measurement of the neutron lifetime. We use an extension of the semi-classical Majorana approach as well as an approximate quantum mechanical analysis, both pioneered by Walstrom et al. [Nucl. Instr. Meth. Phys. Res. A 599, 82 (2009)]. In contrast with this previous work we do not restrict the analysis to purely vertical modes of neutron motion. The lateral motion is shown to cause the predominant depolarization loss in a magnetic storage trap. The system studied also allowed us to estimate the depolarization loss suffered by ultracold neutrons totally reflected on a non-magnetic mirror immersed in a magnetic field. This problem is of preeminent importance in polarized neutron decay studies such as the measurement of the asymmetry parameter A using ultracold neutrons, and it may limit the efficiency of ultracold neutron polarizers based on passage through a high magnetic field.Comment: 18 pages, 6 figure

Multinational Firms, FDI Flows and Imperfect Capital Markets

This paper examines how costly financial contracting and weak investor protection influence the cross-border operational, financing and investment decisions of firms. We develop a model in which product developers have a comparative advantage in monitoring the deployment of their technology abroad. The paper demonstrates that when firms want to exploit technologies abroad, multinational firm (MNC) activity and foreign direct investment (FDI) flows arise endogenously when monitoring is nonverifiable and financial frictions exist. The mechanism generating MNC activity is not the risk of technological expropriation by local partners but the demands of external funders who require MNC participation to ensure value maximization by local entrepreneurs. The model demonstrates that weak investor protections limit the scale of multinational firm activity, increase the reliance on FDI flows and alter the decision to deploy technology through FDI as opposed to arm's length licensing. Several distinctive predictions for the impact of weak investor protection on MNC activity and FDI flows are tested and confirmed using firm-level data.

Spin flip loss in magnetic storage of ultracold neutrons

We analyze the depolarization of ultracold neutrons confined in a magnetic field configuration similar to those used in existing or proposed magneto-gravitational storage experiments aiming at a precise measurement of the neutron lifetime. We use an approximate quantum mechanical analysis such as pioneered by Walstrom \emph{et al} [Nucl. Instrum. Methods Phys. Res. A 599, 82 (2009)]. Our analysis is not restricted to purely vertical modes of neutron motion. The lateral motion is shown to cause the predominant depolarization loss in a magnetic storage trap.Comment: 12 pages, 3 figures, for Proceedings of Neutron Lifetime Worksho

Economic Effects of Regional Tax Havens

How does the opportunity to use tax havens influence economic activity in nearby non-haven countries? Analysis of affiliate-level data indicates that American multinational firms use tax haven affiliates to reallocate taxable income away from high-tax jurisdictions and to defer home country taxes on foreign income. Ownership of tax haven affiliates is associated with reduced tax payments by nearby non-haven affiliates, the size of the effect being equivalent to a 20.8 percent tax rate reduction. The evidence also indicates that use of tax havens indirectly stimulates the growth of operations in non-haven countries in the same region. A one percent greater likelihood of establishing a tax haven affiliate is associated with 0.5 to 0.7 percent greater sales and investment growth by non-haven affiliates, implying a complementary relationship between haven and non-haven activity. The ability to avoid taxes by using tax haven affiliates therefore appears to facilitate economic activity in non-haven countries within regions.

Calculation of geometric phases in electric dipole searches with trapped spin-1/2 particles based on direct solution of the Schr\"odinger equation

Pendlebury $\textit{et al.}$ [Phys. Rev. A $\textbf{70}$, 032102 (2004)] were the first to investigate the role of geometric phases in searches for an electric dipole moment (EDM) of elementary particles based on Ramsey-separated oscillatory field magnetic resonance with trapped ultracold neutrons and comagnetometer atoms. Their work was based on the Bloch equation and later work using the density matrix corroborated the results and extended the scope to describe the dynamics of spins in general fields and in bounded geometries. We solve the Schr\"odinger equation directly for cylindrical trap geometry and obtain a full description of EDM-relevant spin behavior in general fields, including the short-time transients and vertical spin oscillation in the entire range of particle velocities. We apply this method to general macroscopic fields and to the field of a microscopic magnetic dipole.Comment: 11 pages, 4 figure

Chains of Ownership, Regional Tax Competition, and Foreign Direct Investment

This paper considers the effect of taxation on the location of foreign direct investment (FDI) and taxable income reported by multinational firms with particular attention to the regional dynamics of tax competition and the role of chains of ownership. Confidential affiliate-level data are used to compare the investment and income-reporting behavior of American-owned foreign affiliates across ownership forms and regions. Ten percent higher tax rates are associated with 5.0 percent lower FDI, controlling for parent company and observable aspects of local economies, and 0.9 percent lower returns on assets, controlling for parent company and level of FDI. Tax effects are particularly strong within Europe, where ten percent higher tax rates are associated with 7.7 percent lower FDI and 1.7 percent lower returns on assets. Indirectly owned foreign affiliates also exhibit strong tax effects, ten percent higher tax rates being associated with 12.0 percent lower FDI and 1.4 percent lower returns on assets. American firms finance a growing fraction of their foreign operations indirectly through chains of ownership, which now account for more than 30 percent of aggregate foreign assets and sales. Ownership chains are particularly concentrated among European affiliates. Since multinational firms from countries other than the United States face tax environments similar to those faced by indirectly owned affiliates of American companies, these results suggest a greater sensitivity of FDI to taxes for non-American firms. The results also suggest that European economic integration may have the effect of intensifying tax competition between European jurisdictions.

A Multinational Perspective on Capital Structure Choice and Internal Capital Markets

This paper examines the impact of local tax rates and capital market conditions on the level and composition of borrowing by foreign affiliates of American multinational corporations. The evidence indicates that 10 percent higher local tax rates are associated with 2.8 percent higher debt/asset ratios of American-owned affiliates, and that borrowing from related parties is particularly sensitive to tax rates. Borrowing by American affiliates responds to local inflation and political risks, and is more costly in countries with underdeveloped capital markets and those providing weak legal protections for creditors. Affiliates in environments where external borrowing is costly borrow less from unrelated parties: one percent higher interest rates are associated with 1.4 to 2.0 percent less external debt as a fraction of assets. Instrumental variables analysis reveals that affiliates substitute loans from parent companies for between half and three quarters of the reduced borrowing from unrelated parties stemming from adverse local capital market conditions. These patterns suggest that multinational firms are able to structure their finances in response to tax and capital market conditions, thereby creating opportunities not available to many of their local competitors.