Company stock price reactions to the 2016 election shock: Trump, taxes, and trade
Donald Trump's surprise election shifted expectations: corporate taxes would be lower and trade policies more restrictive. Relative stock prices responded appropriately. High-tax firms and those with large deferred tax liabilities (DTLs) gained; those with significant deferred tax assets from n...
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| Veröffentlicht in: | Journal of financial economics 2018-11, Vol.130 (2), p.428-451 |
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| container_end_page | 451 |
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| container_issue | 2 |
| container_start_page | 428 |
| container_title | Journal of financial economics |
| container_volume | 130 |
| creator | Wagner, Alexander F. Zeckhauser, Richard J. Ziegler, Alexandre |
| description | Donald Trump's surprise election shifted expectations: corporate taxes would be lower and trade policies more restrictive. Relative stock prices responded appropriately. High-tax firms and those with large deferred tax liabilities (DTLs) gained; those with significant deferred tax assets from net operating loss carryforwards (NOL DTAs) lost. Domestically focused companies fared better than internationally oriented firms. A price contribution analysis shows that easily assessed consequences (DTLs, NOL DTAs, tax rates) were priced faster than more complex issues (net DTLs, foreign exposure). In sum, the analysis demonstrates that expectations about tax rates greatly impact firm values. |
| doi_str_mv | 10.1016/j.jfineco.2018.06.013 |
| format | Article |
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| identifier | ISSN: 0304-405X |
| ispartof | Journal of financial economics, 2018-11, Vol.130 (2), p.428-451 |
| issn | 0304-405X 1879-2774 |
| language | eng |
| recordid | cdi_proquest_journals_2126561809 |
| source | Access via ScienceDirect (Elsevier) |
| subjects | Corporate interest payments Corporate taxes Deferred income taxes Election surprise Elections Event study International trade Market efficiency Post-news drift Price contribution analysis Prices Stock prices Stock returns Stocks Studies Tax rates Taxation Taxes Trade policy |
| title | Company stock price reactions to the 2016 election shock: Trump, taxes, and trade |
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