Can we use WACC framework for thinking of these impacts?
Most of the debate about tax avoidance and profit shifting by MNEs focuses on tax revenues implications of such strategies. But, as we know, financial systems from corporate tax to financial returns, from financial returns to the cost of capital, from MNEs to small enterprises, from internationally trading to domestic companies, and so on, are inter-connected, tightly coupled, and complex (VUCA).
In your opinion, what impacts, if any, do the MNEs tax avoidance efforts – carried over decades, over hundreds of billions of dollars in earnings annually, and trillions of dollars of assets – have on the cost of capital for smaller companies operating in the US?
Can we use WACC framework for thinking of these impacts? What about CAPM framework? Risk premium pricing framework? Why? Why not?
