Company Stock Price Reactions to the 2016 Election Shock: Trump, Taxes and Trade

Zeckhauser, Richard; Ziegler, Alexandre

doi:10.2139/ssrn.2909835

Cited by 34 publications

(57 citation statements)

References 24 publications

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“…Trump's presidential election and the nomination of Scott Pruitt to head the Environmental Protection Agency (EPA), by rewarding companies in high-emissions industries, at least in the short run. Yet for the same policy events Wagner et al (2018) find that investors rewarded companies demonstrating more responsible climate strategies.…”

Section: Climate Risks and Financial Evaluationmentioning

confidence: 99%

A Climate Risk Assessment of Sovereign Bonds’ Portfolio

Battiston,

Monasterolo

2019

SSRN Journal

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A climate risk assessment of sovereign bonds' portfolio. PaperOriginal Citation:Monasterolo, Irene ORCID: https://orcid.org/0000-0001-5423-6009 and Battiston, StefanoA climate risk assessment of sovereign bonds' portfolio. AbstractAligning finance to sustainability requires metrics and methods to price forward-looking climate risks and opportunities in financial contracts and in investors' portfolios. Traditional approaches to financial pricing cannot incorporate the nature of climate risks, i.e. deep uncertainty, non-linearity, complexity and endogeneity. To fill this gap, we develop a framework for climate-financial risk assessment and management under uncertainty. We consider a risk averse investor with an information set given by past market valuation, information on future climate economic shocks, and utility maximization based on the minimization of the Climate Value at Risk (VaR) in presence of incomplete markets. We then consider a disorderly policy transition to 2 • C scenarios that leads to unanticipated shocks in economic trajectories of fossil fuel and renewable energy sectors, estimated using Integrated Assessment Models.We model the shock transmission from the change in sectors' Gross Value Added to firms' profitability and to sovereign fiscal revenues. We then introduce the forward-looking climate policy shocks in sovereign bonds valuation introducing scenario-conditioned financial risk metrics (Climate VaR, Climate Spread). We provide an application to OECD sovereign bonds of Austrian National Bank's portfolio. We find that investments' climate alignment can strengthen the sovereign fiscal and financial position by decreasing the climate spread.In contrast, misalignment can negatively affect countries' economic competitiveness and financial stability, and thus the performance of investors who own such bonds. Our analysis supports investors' portfolios risk management strategies in the low-carbon transition and and financial supervisors in the design of prudential risk measures. 1

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Section: Climate Risks and Financial Evaluationmentioning

confidence: 99%

A Climate Risk Assessment of Sovereign Bonds’ Portfolio

Battiston,

Monasterolo

2019

SSRN Journal

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“…Then it can be concluded that taxes affect investment decisions if the imposition of taxes affects the number of costs and profits obtained by investors. Research conducted by Wagner et al (2018) explains that expectations about tax rates greatly influence the trading value of companies. Then Muñoz and Rodriguez (2017) find that tax deductions have a significant influence on stock prices.…”

Section: The Effect Of Tax Information On Trading Valuementioning

confidence: 99%

“…Research conducted by Fischer and Gallmeyer (2016) explains that the stock trading strategy has a significant effect on tax information such as capital gain taxes. According to Wagner, Zeckhauser, and Ziegler (2018) explains that expectations about tax rates greatly affect the value of stock trading. Then Pranata et al (2015) revealed that tax rates have a positive effect on stock prices.…”

Section: Introductionmentioning

confidence: 99%

The Effect of Accounting Information and Tax Information on Trading Value Moderated by Competitive Strategy

Suhendra

Murwaningsari

2019

Journal of Accounting, Business and Finance Research

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This article is a research about the influence of accounting information and tax information on trading values with competitive strategies as a moderating variable in the Indonesia Stock Exchange. Accounting information was measured from the current ratio, tax information was measured from VAT, the trading value was measured by the logarithm of natural total trading value, and competitive strategy was measured by premium price capability (PPC). The sample in this research trading value stock company that was consistent in the last five years listed on the Stock Exchange during 2013-2017 as many as 15 companies. Data collection method used purposive sampling technique. Data analysis technique was multiple panel data regression analysis using Stata software. The results show that accounting information does not have a significant effect on value trading. Tax information has a significant negative effect on trading value. Competitive strategies have a significant positive effect on trading value. Competitive strategy is not able to significantly moderate the influence of accounting information on trading value. Meanwhile, competitive strategy can moderate positively and significantly negative impact on the effect of tax information on trading value.

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“…For example, when Donald Trump was elected President in 2016 with Republicans controlling the Congress, there was low uncertainty about the likelihood of future corporate tax cuts. However, the details of this reform were not clear, especially as two different tax plans were on the table at that time -the Trump campaign one and the corporate tax plan from the House Republicans (Wagner, Zeckhauser, and Ziegler, 2018). The timeline of the reform was also unknown.…”

Section: Introductionmentioning

confidence: 99%

The Real Effects of Checks and Balances: Policy Uncertainty and Corporate Investment

Duquerroy

2019

SSRN Journal

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This article explores the economic effects of checks and balances on corporate investment and employment. I use U.S. gubernatorial election results from 1978 to 2010 as a source of exogenous variation in whether the party controls both the executive and the legislative branch (unified government) or not (divided government), which determines its ability to implement its political agenda. I find that both public and private firms respond to the political cycle by reducing investment and hiring when government becomes unified. Investment drops by three to five percent in the year following an election resulting in unified government, while stock returns volatility is three percent higher. The findings support the hypothesis that moving from divided to unified government raises policy uncertainty by increasing the probability of future policy changes. Consistent with a real option channel, the effect is stronger for capital intensive firms with lower asset redeployability.

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Company Stock Price Reactions to the 2016 Election Shock: Trump, Taxes and Trade

Cited by 34 publications

References 24 publications

A Climate Risk Assessment of Sovereign Bonds’ Portfolio

A Climate Risk Assessment of Sovereign Bonds’ Portfolio

The Effect of Accounting Information and Tax Information on Trading Value Moderated by Competitive Strategy

The Real Effects of Checks and Balances: Policy Uncertainty and Corporate Investment

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