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Contribution Details

Type Journal Article
Scope Discipline-based scholarship
Title Company Stock Price Reactions to the 2016 Election Shock: Trump, Taxes and Trade
Organization Unit
Authors
  • Alexander Wagner
  • Richard J Zeckhauser
  • Alexandre Ziegler
Item Subtype Original Work
Refereed Yes
Status Published electronically before print/final form (Epub ahead of print)
Language
  • English
Journal Title Journal of Financial Economics
Geographical Reach international
Volume forthcoming
Page Range -
Date 2017
Abstract Text 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.
Free access at Official URL
Official URL https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2909835
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