Graduate Studies

 

First Advisor

Edward Balistreri

Degree Name

Doctor of Philosophy (Ph.D.)

Committee Members

John Anderson, John Beghin, Yifan Gong

Department

Economics

Date of this Version

8-2025

Document Type

Dissertation

Citation

A dissertation presented to the Graduate College of the University of Nebraska in partial fulfillment of requirements for the degree of Doctor of Philosophy

Major: Economics

Under the supervision of Professor Edward Balistreri

Lincoln, Nebraska, August 2025

Comments

Copyright 2025, Xuerui Kou. Used by permission

Abstract

This dissertation explores how taxation and institutional environments shape the global strategies of United States multinational enterprises (MNEs), with a particular focus on intangible assets and the cross-border allocation of innovation. Positioned at the intersection of international trade, public economics, and innovation studies, the three chapters collectively examine firm responses to international tax incentives and regulatory asymmetries.

Chapter 1 introduces the motivation and theoretical foundations of the dissertation, reviews related literature, and outlines the core research questions and empirical strategies. It highlights the increasing policy and academic interest in the geographic mobility of intangible capital, particularly in the context of recent tax reforms such as the 2017 United States Tax Cuts and Jobs Act (TCJA).

Chapter 2 (joint with Edward Balistreri) identifies mispriced intellectual property transfers to tax-haven countries as they supply intellectual property to China. The analysis relies on country-level bilateral data on services trade. We find evidence consistent with a pattern of under-reported intellectual property values as the asset moves from the US to a third-country tax haven and ultimately to China, particularly in Cayman Islands. When we aggregate to total services (which include intellectual property as a component), however, the measured distortion is insignificant. Intangible intellectual-property transfers are thus identified as the main source of under-reported exports by US Multinationals to their affiliates in tax havens.

Chapter 3 (joint with John Anderson and Yifan Gong) examines the effects of the 2018 Tax Cuts and Jobs Act (TCJA) on the foreign direct investment (FDI) behavior of US multinational enterprises. Using country-industry-level panel data from the US Bureau of Economic Analysis spanning 2011 to 2022, we implement a difference-in-differences and event study framework to identify changes in FDI outflows, disaggregated by reinvested earnings, equity, and intercompany debt. We find a significant short-term decline in FDI outflows toward tax haven jurisdictions following the TCJA, which is primarily driven by a sudden drop in reinvestment of earnings. In contrast, we observe limited impact on real activity indexes, such as employment and compensation. The response is concentrated in the service sector, consistent with tax planning strategies based on intangible assets.

Chapter 4 investigates how multinational enterprises make sequential patent ownership location decisions using a three-stage framework: whether to assign patents abroad, whether to choose tax havens, and which specific destination to select. Using comprehensive U.S. patent assignment data from 2011–2017, we find that smaller multinationals exhibit tax sensitivity ten times higher than large firms and are more likely to use tax havens, challenging the conventional focus on giant corporations as primary drivers of profit shifting. Our counterfactual analysis of the 2017 Tax Cuts and Jobs Act shows the 14 percentage point tax rate reduction generates a 60\% reduction in foreign patent assignments among small firms while having minimal effects on large enterprises.

Advisor: Edward Balistreri

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