
- 14 Feb 2019
- Cold Call Podcast
The Delicious History of Hershey Chocolate
Have you ever wondered how Hershey chocolate came to be so popular? Professor Nancy Koehn discusses the life and vision of Milton Hershey, the entrepreneur and philanthropist behind the Hershey chocolate bar, the town of Hershey, Pennsylvania, and the Milton Hershey School. Open for comment; 0 Comment(s) posted.

- 24 Oct 2017
- Research & Ideas
Tax Reform is on the Front Burner Again. Here’s Why You Should Care
As debate begins around the Republican tax reform proposal, Mihir Desai and Matt Weinzierl discuss the first significant tax legislation in 30 years. Open for comment; Comment(s) posted.

- 12 Jul 2017
- Book
What Jane Austen and Mel Brooks Can Teach Us About Finance
A new book by Mihir Desai links the fundamentals of finance to several centuries of literature, history, philosophy, music, visual arts, theater, and comedy to make the subject seem less mystifying—and more humanizing—to a broad audience of non-financiers. Open for comment; Comment(s) posted.
- 20 Jan 2017
- Research & Ideas
Here’s How Businessman Trump Is Likely to Approach the Presidency
Harvard Business School professors weigh in on how Donald Trump’s nearly 50 years of experience in building a global corporate empire (and zero years of political experience) might shape his approach to leading a nation. Open for comment; Comment(s) posted.
- 20 Dec 2016
- Research & Ideas
The 10 Most Popular 'Cold Call' Podcasts
As the year comes to a close, we revisit the Cold Call podcasts that attracted the most listeners in 2016. Open for comment; Comment(s) posted.
- 15 Sep 2016
- Research & Ideas
Political Dysfunction Makes America Less Competitive
The American economy is “failing the test of competitiveness," according to a new Harvard Business School study written by Michael E. Porter, Jan W. Rivkin, and Mihir A. Desai. Open for comment; Comment(s) posted.

- 01 Sep 2016
- Cold Call Podcast
Behind Apple's Tax Situation, an Unprecedented Financial Policy
The European Union recently hit Apple with a $14.5 billion tax bill, but that’s hardly the first or worst financial challenge the technology giant has faced. Mihir Desai explains the financial wiring behind the inventors of the iPhone. Open for comment; Comment(s) posted.
- 24 Jul 2014
- Op-Ed
Reform Tax Law to Keep US Firms at Home
The flood of US corporations relocating to other countries is a hot topic in Congress. In recent testimony before the Senate Committee on Finance, Mihir Desai provided possible solutions around rethinking corporate tax and regulatory policy. Open for comment; 3 Comment(s) posted.
- 28 Nov 2012
- What Do You Think?
Should Pay-for-Performance Compensation be Replaced?
Summing up: In spite of its naysayers, pay for performance compensation still makes sense to most of us, according to those responding to Jim Heskett's column on the subject. But there is a difference of opinion of about when and how it works and how it should be structured. Closed for comment; 24 Comment(s) posted.

- 29 Jun 2012
- Working Paper Summaries
Trade Credit and Taxes
Economists have extensively analyzed the effects of taxation on many aspects of corporate financial policy, including borrowing and dividend distributions. But the effects of corporate income taxes on trade credit practices have been much less understood. Research by Mihir A. Desai, C. Fritz Foley, and James R. Hines, Jr. develops the idea that trade credit allows firms to reallocate capital in response to tax differences. Using detailed data on the foreign affiliates of US multinational firms, the authors are able to observe affiliates of the same firm operating in different countries and therefore facing different corporate income tax rates. Taken together, the findings illustrate that firms use trade credit to reallocate capital from low-tax jurisdictions to high tax jurisdictions to capitalize on tax-induced differences in pretax marginal products of capital. Their actions imply that tax rate differences across countries significantly affect capital allocation within firms, depressing investment levels in high tax jurisdictions and introducing differences between the productivity of capital deployed in different locations. Key concepts include: This paper examines the extent to which taxation influences trade credit practices by affecting returns to investment. Analysis of detailed foreign-affiliate-level data suggests that tax effects are large and statistically significant in explaining trade credit choices. Affiliates in low tax jurisdictions have higher net working capital positions than do other affiliates. Managers have incentives to set accounts receivable and accounts payable in a manner that reallocates capital from lightly taxed operations where investment opportunities have dissipated to highly taxed operations where profitable opportunities remain. This mechanism implies that net working capital positions, or the difference between accounts receivable and accounts payable, should be higher for firms facing lower tax rates. Closed for comment; 0 Comment(s) posted.

- 03 Aug 2011
- Working Paper Summaries
Tax Policy and the Efficiency of US Direct Investment Abroad
The tax policy toward multinational firms has come under increased scrutiny with the rise of global activities of firms and concerns that these activities displace activities at home. This scrutiny has raised the question of whether current tax policy inefficiently subsidizes the foreign activities of firms. Mihir A. Desai, C. Fritz Foley, and James R. Hines, Jr. consider this claim by applying the theory of dynamic efficiency to the activities of multinational firms. Specifically, by comparing direct investment abroad with repatriated investment returns over the last sixty years, they conclude that firms are not investing to dynamically inefficient levels, suggesting that current tax policy is not an inefficient subsidy. Key concepts include: U.S. direct investment abroad generated cash flows greater than investment deployed by more than $1 trillion for equity investments from 1982-2010 annually, and $2 trillion for equity and debt investments from 1950-2010. The data suggest that US foreign investment is dynamically efficient. Closed for comment; 0 Comment(s) posted.
- 14 Dec 2010
- Op-Ed
Tax US Companies to Spur Spending
With traditional monetary and fiscal policy instruments to stimulate the economy seemingly exhausted, professor Mihir Desai offers a radical proposal: Use taxes to motivate corporations to spend a trillion dollars in cash. Open for comment; 9 Comment(s) posted.

- 24 Mar 2009
- Working Paper Summaries
Securing Jobs or the New Protectionism? Taxing the Overseas Activities of Multinational Firms
Popular imagination often links two significant economic developments: the rapid escalation of the foreign activities of American multinational firms over the last 15 years, and rising levels of economic insecurity, particularly among workers in certain sectors. The presumed linkages between these phenomena have led many to call for a reconsideration of the tax treatment of foreign investment. Increasing the tax burden on outbound investment by American multinational firms, it is claimed, offers the promise of alleviating domestic employment losses and insecurity while also raising considerable revenue. HBS professor Mihir A. Desai looks beneath the trends, examining the economic determinants of outbound investment decisions and synthesizing what is known about the relationship between domestic and foreign activities. Key concepts include: There is no clear evidence of significant negative impacts on domestic investment or employment due to the overseas activities of firms. Foreign activity by multinational firms does not necessarily displace domestic economic activity. Other factors—such as falling prices of investment goods, and/or trade patterns—may have driven the employment changes that are so worrisome. When policymakers decide the appropriate taxation of multinational firms, they should resist the tempting logic of protectionism. Closed for comment; 0 Comment(s) posted.
- 26 Jan 2009
- Research & Ideas
Where is Home for the Global Firm?
Global markets are changing the relationship between firms and nation-states in important ways, says HBS professor Mihir A. Desai. His new working paper, "The Decentering of the Global Firm," offers a practical framework for business leaders to think strategically about where to locate their company's financial and legal homes, and managerial talent. Q&A with Desai. Key concepts include: Three critical aspects of a firm's national identity—its legal and financial home and its center for managerial talent—are increasingly distributed worldwide. There are benefits and costs to decentering, says Desai. The challenge for managers is to choose each home wisely. Firms that have left their traditional homebase include News Corporation, Shire Pharmaceuticals, Halliburton, and WPP Group, among others. Closed for comment; 0 Comment(s) posted.

- 26 Jan 2009
- Working Paper Summaries
The Decentering of the Global Firm
Firms such as Caterpillar are typically considered American companies by virtue of history while Honda, for example, is regarded as a Japanese company. However, the archetypal multinational firm with a particular national identity and a corporate headquarters fixed in one country is becoming obsolete as firms continue to maximize the opportunities created by global markets. The defining characteristics of what makes a firm belong to a country—where it is incorporated, where it is listed, the nationality of its investor base, the location of its headquarters functions—are no longer bound to one country. Why are these changes taking place, and what are their consequences? This paper places the increasing mobility of corporate identities within the broader setting of transformations to the "shape" of global firms over the last half century. Key concepts include: Responding strategically to these changes requires a reconceptualization of what a corporate home is. Managers will make conscious choices about how to unbundle activities that have traditionally been centered in a home country headquarters. Policymakers in countries around the world need to understand how to create attractive homes for firms, and researchers need to devise ways to incorporate these changes in their empirical and theoretical work. Closed for comment; 0 Comment(s) posted.
- 30 Jul 2008
- Op-Ed
Why the U.S. Should Encourage FDI
American financial executives are courting foreign direct investors, particularly sovereign wealth funds, for new investments. Should these investments draw increased scrutiny from U.S. regulators? Harvard Business School professor Mihir Desai argues that most of these deals work out in America's best financial interest. Key concepts include: Foreign direct investors in the United States appear to systematically earn low returns on their investments in American corporate assets—less than what U.S. multinationals earn with their investments abroad. Rather than erecting barriers, America should be thanking foreign direct investors for investments that appear to be, on average, transferring wealth from abroad to the United States. Closed for comment; 0 Comment(s) posted.
- 07 Apr 2008
- Research & Ideas
The Debate over Taxing Foreign Profits
Corporate tax policy has suddenly become a hot topic in the U.S., including the issue of whether current tax laws encourage American firms to outsource jobs to other countries. Harvard Business School professor Mihir Desai makes a case for exempting foreign profit from taxes if proper safeguards are put in place. Key concepts include: The United States is increasingly an outlier in its taxation of corporate income earned on foreign soil. Critics argue the ability to defer U.S. taxation until profits are repatriated provides an incentive to ship jobs overseas. On the other hand, the current worldwide system is often derided as making American firms uncompetitive relative to their foreign competition. An alternative may be to exempt foreign income from taxes paired with safeguards against an overly aggressive use of tax havens. Closed for comment; 0 Comment(s) posted.
- 18 Jun 2007
- Op-Ed
Leveling the Executive Options Playing Field
Harvard Business School professor Mihir A. Desai recently presented testimony to a U.S. Senate subcommittee looking at the subject of executive stock options. His theme: A "dual-reporting system" makes it difficult for investors and tax authorities to learn the real numbers. Closed for comment; 0 Comment(s) posted.
- 20 Dec 2006
- Op-Ed
Investors Hurt by Dual-Track Tax Reporting
What corporations report in profit to the IRS and what they report to shareholders are often two different numbers—sometimes wildly so. That's why the IRS and Securities and Exchange Commission are proposing that companies publicly report taxes paid—and Professor Mihir Desai thinks this is only a first step. Key concepts include: Corporations are allowed to report different profit figures to capital markets and to tax authorities, creating large, unexplained gaps that potentially confuse investors. The IRS and SEC have jointly called for a simple but controversial proposal: Companies would be required to disclose how much they pay in taxes, an amount not now decipherable from public filings. More ambitious alternatives should be considered, including making corporate tax returns public, an end to the dual-book system, and a lower corporate tax rate on profits reported to capital markets. Closed for comment; 0 Comment(s) posted.
- 25 Oct 2006
- Op-Ed
Fixing Executive Options: The Veil of Ignorance
Who says you can't rewrite history? Dozens of companies have been caught in the practice of backdating options for top executives. But this is only part of the problem with C-level compensation packages, which often motivate top executives to act in their own best interests rather than those of shareholders. Professors Mihir Desai and Joshua Margolis turn to philosopher John Rawls for a solution: Reward the execs, but don't give them the details. Key concepts include: Too often executive incentive packages are not aligned with the best interests of shareholders. Why create long-term value if your bread is buttered by quarterly performance? Option compensation could be restructured to ensure that managers were aware of the value of their compensation without any knowledge of the details of their compensation—a concept inspired by philosopher John Rawls' work on distributive justice. These options may only be useful for CEOs, senior officers, and directors—not middle management. Closed for comment; 0 Comment(s) posted.
Think of it as Professors in Cars Having Coffee
Has the art of civil debate returned? In the new Harvard Business School podcast series After Hours, professors Youngme Moon, Felix Oberholzer-Gee, and Mihir Desai discuss issues ranging from gun control to voice-activated digital assistants. Open for comment; Comment(s) posted.