Is the American offshore cash pile blinding investors to corporate weakness?

When American companies take advantage of loopholes to keep their earnings overseas and away from the American tax man, they typically justify the legal-but-embarrassing move by appealing to their responsibility to shareholders—anything to get them another buck.

But a March 17 Credit Suisse report on the $2.1 trillion in cash held by the overseas subsidiaries of US corporations suggests that all that cash—and the lack of transparency around it—might be blinding investors to potential weaknesses in company balance sheets.

They estimate that the companies in the S&P 500 collectively owe $533 billion in taxes, currently an off-balance sheet liability because corporations say they will keep their cash abroad indefinitely. For comparison, the US collected $321 billion in corporate taxes in 2014, and the total budget deficit was $483 billion.

The report’s authors wonder if the US will be coming for the rest of that money soon enough. Between IRS pressure on companies like Google to justify their “indefinite reinvestment” of foreign earnings when so much of that investment is simply cash—often sitting in US banks—and the possibility of tax reform or a repatriation holiday, and it’s easy to see why.

The desire to avoid bringing earnings back to the US has also led many companies to borrow domestically when they need to pay stock dividends or buy back shares. While this debt is supported by a large amount of cash, it’s a riskier addition to the balance sheet, especially if between 5% and 25% of that cash will eventually go to the government. Tech firms in particular have been a big fan of stashing cash overseas and borrowing domestically.

Overall, the report’s authors are concerned with transparency, since very few companies disclose precisely where their cash is and what they are doing with it. For some companies, the tax liability for their overseas cash is more than the 10% of the firm’s market value.

With undisclosed liabilities like that, the shareholder justification for parking cash overseas appears weaker than its adherents claim.