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(Un)intended consequences? The impact of the 2017 tax cuts and jobs act on shareholder wealth
We study the stock market reactions to the Tax Cuts and Jobs Act (TCJA), the most significant structural U.S. tax reform in over 30 years. In line with the stated intent of TCJA proponents, we find that the Act benefited highly taxed firms. However, the Act hindered firms with international operatio...
Autores principales: | , , , |
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Formato: | Online Artículo Texto |
Lenguaje: | English |
Publicado: |
Elsevier B.V.
2020
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Materias: | |
Acceso en línea: | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7250099/ https://www.ncbi.nlm.nih.gov/pubmed/32562471 http://dx.doi.org/10.1016/j.jbankfin.2020.105860 |
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author | Kalcheva, Ivalina Plečnik, James M. Tran, Hai Turkiela, Jason |
author_facet | Kalcheva, Ivalina Plečnik, James M. Tran, Hai Turkiela, Jason |
author_sort | Kalcheva, Ivalina |
collection | PubMed |
description | We study the stock market reactions to the Tax Cuts and Jobs Act (TCJA), the most significant structural U.S. tax reform in over 30 years. In line with the stated intent of TCJA proponents, we find that the Act benefited highly taxed firms. However, the Act hindered firms with international operations as well as firms with high interest expense and tax losses. Counter to claims that the TCJA would quickly spur economic growth, we find that financially constrained and high growth opportunity firms did not benefit. Rather, market participants anticipate that most of the TCJA's benefits will be passed on to shareholders via higher corporate payouts. We confirm these market expectations by documenting that firms did increase payouts via repurchases after the TCJA, but did not increase their corporate investments. |
format | Online Article Text |
id | pubmed-7250099 |
institution | National Center for Biotechnology Information |
language | English |
publishDate | 2020 |
publisher | Elsevier B.V. |
record_format | MEDLINE/PubMed |
spelling | pubmed-72500992020-05-27 (Un)intended consequences? The impact of the 2017 tax cuts and jobs act on shareholder wealth Kalcheva, Ivalina Plečnik, James M. Tran, Hai Turkiela, Jason J Bank Financ Article We study the stock market reactions to the Tax Cuts and Jobs Act (TCJA), the most significant structural U.S. tax reform in over 30 years. In line with the stated intent of TCJA proponents, we find that the Act benefited highly taxed firms. However, the Act hindered firms with international operations as well as firms with high interest expense and tax losses. Counter to claims that the TCJA would quickly spur economic growth, we find that financially constrained and high growth opportunity firms did not benefit. Rather, market participants anticipate that most of the TCJA's benefits will be passed on to shareholders via higher corporate payouts. We confirm these market expectations by documenting that firms did increase payouts via repurchases after the TCJA, but did not increase their corporate investments. Elsevier B.V. 2020-09 2020-05-26 /pmc/articles/PMC7250099/ /pubmed/32562471 http://dx.doi.org/10.1016/j.jbankfin.2020.105860 Text en © 2020 Elsevier B.V. All rights reserved. Since January 2020 Elsevier has created a COVID-19 resource centre with free information in English and Mandarin on the novel coronavirus COVID-19. The COVID-19 resource centre is hosted on Elsevier Connect, the company's public news and information website. Elsevier hereby grants permission to make all its COVID-19-related research that is available on the COVID-19 resource centre - including this research content - immediately available in PubMed Central and other publicly funded repositories, such as the WHO COVID database with rights for unrestricted research re-use and analyses in any form or by any means with acknowledgement of the original source. These permissions are granted for free by Elsevier for as long as the COVID-19 resource centre remains active. |
spellingShingle | Article Kalcheva, Ivalina Plečnik, James M. Tran, Hai Turkiela, Jason (Un)intended consequences? The impact of the 2017 tax cuts and jobs act on shareholder wealth |
title | (Un)intended consequences? The impact of the 2017 tax cuts and jobs act on shareholder wealth |
title_full | (Un)intended consequences? The impact of the 2017 tax cuts and jobs act on shareholder wealth |
title_fullStr | (Un)intended consequences? The impact of the 2017 tax cuts and jobs act on shareholder wealth |
title_full_unstemmed | (Un)intended consequences? The impact of the 2017 tax cuts and jobs act on shareholder wealth |
title_short | (Un)intended consequences? The impact of the 2017 tax cuts and jobs act on shareholder wealth |
title_sort | (un)intended consequences? the impact of the 2017 tax cuts and jobs act on shareholder wealth |
topic | Article |
url | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7250099/ https://www.ncbi.nlm.nih.gov/pubmed/32562471 http://dx.doi.org/10.1016/j.jbankfin.2020.105860 |
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