The new U.S. tax law is likely to increase after-tax cash flows for U.S.-based companies by anywhere from 10% to 20%, depending on their current tax position. As we approach earnings season, investors should listen carefully to what CEOs plan to do with the money. There’s a strong argument that they should invest in growth, and the newly available cash offers them a unique chance to do so. Unfortunately, too many are likely to squander the opportunity.
What U.S. CEOs Should Do with the Money from Corporate Tax Cuts
Spend it on growth, not buybacks.
February 01, 2018
Summary.
Investors should listen carefully to what CEOs plan to do with the money from lower U.S. corporate taxes. There’s a strong argument that they should invest in growth, and the newly available cash offers them a unique chance to do so. Unfortunately, too many are likely to squander the opportunity. Growth-oriented investments aren’t hard to recognize, and there are three particular areas companies should consider.