Company stock price reactions to the 2016 election shock: Trump, taxes, and trade

Wagner, Alexander F.; Zeckhauser, Richard; Ziegler, Alexandre

doi:10.1016/j.jfineco.2018.06.013

Cited by 193 publications

(54 citation statements)

References 17 publications

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“…The negative reaction is not limited to companies directly controlled by the State Treasury; the coefficients of the indirectly controlled SOE variable are also negative and statistically significant. Despite the fact the hypotheses suggested an expected price increase due to the new prime minister's profile, the market response was negative, unlike the increase in stock prices after Donald Trump's election (Shaikh, 2017;Wagner et al, 2018). This can be attributed to the uncertainty regarding the new administration's reforms (Gulen & Ion, 2016;Luo et al, 2017).…”

Section: Discussionmentioning

confidence: 89%

“…Krol (2014) proved that economic policy uncertainty increases the exchange rate volatility. The election of US President Trump had a negative impact on US companies with significant foreign exposure (Wagner et al, 2018). Jayachandran (2006) measured the price response to the unexpected gain in control of the US Senate by the Democratic Party.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

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Market reactions to unexpected political changes: evidence from advance emerging markets

Podgórski

2020

Economic Research-Ekonomska Istraživanja

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The main aim of this article is to assess the influence of change in Prime Minister on Polish stock market. Prime Minister Szydło resigned shortly after she survived the second vote of no confidence on December 8, 2017, and was replaced by Morawiecki, the Vice-Prime Minister and Minister of Finance, and a former CEO of a large bank. 1 Considering the aforementioned context, this study tests four hypotheses regarding the market reaction in terms of companies' shareholder structure. An event study analysis was performed to calculate cumulative abnormal returns, and regression models were estimated to test the hypotheses. The author finds significant negative price changes only for stateowned enterprises (SOEs) both directly and indirectly controlled by the government. I assume that this reaction in the case of SOEs was caused by the uncertainty related to the likely changes in the management.

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Section: Discussionmentioning

confidence: 89%

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

Market reactions to unexpected political changes: evidence from advance emerging markets

Podgórski

2020

Economic Research-Ekonomska Istraživanja

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“…The outcomes suggest that share value reacts to changes in capital gain although stock price capitalised predicted capital gains levies. Strong empirical proofs have been exhibited by Wagner et al (2018) that anticipation of a significant corporate tax reduction noticeably influenced the income return of the share. Especially, corporations having high-level effective tax charges and excessive outstanding tax burden had benefited, whereas firms having outstanding tax resources ensuing from carrying forward net operating losses had gone down.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Additionally, contemporary research endeavours try to identify whether the changes in tax rate has an influence on equity value such as, e.g. Stejskalová (2016), Wagner, Zeckhauser, and Ziegler (2018). Therefore the tax reduction effect on equity valuation and equity investment decision emerges as one of the contemporary issues to be investigated.…”

Section: Introductionmentioning

confidence: 99%

Does Market React to Tax Reduction News? An Empirical Study on Corporate Tax Reduction of Bangladesh in 2017-18

Adnan¹

2019

Business, Management and Education

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Purpose – This study tries to investigate the capital market reaction to the corporate tax reduction announcement (37.5% from 40%) in Bangladesh for publicly listed Banking, Insurance and Financial Institutions of 2017-18. Methodology – This study applied an event study approach to identify any significant average abnormal returns as well as cumulative average abnormal returns of all the publicly listed Banks, Insurances and Financial institutions around the announcement period. Findings – Insignificant average abnormal return (AAR) experienced in case of Banking and Insurance industry on event day, except the financial institutions which have generated a statistically significant abnormal negative return on announcement day. The combined AAR of all three sectors has also generated statistically insignificant return around event windows which suggest that investors did not consider tax reduction news as valuable information for investment decision nor considering it as an essential factor of share value. Limitation – The study did not consider any possible extraneous variable that could result in insignificant reactions. Practical Implication – The findings of this research would considerably contribute to the financial and economic policy formulation while taken into consideration the possible impact of the policy over the capital market of Bangladesh. Originality – This study makes a considerable input to the research in the area of taxes linked to the behavioural finance applying the unique variable of investor’s reactions.

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“…In 2016, various high -risk asset prices rose sharply, and the volatility of the financial markets rose to a low level, while economic uncertainty measurements rose sharply, which was partly due to the results of the British referendum on EU membership and the U.S. presidential elections (Belke et al 2018;Wagner et al 2018). In retrospect, other political clashes may raise national financial conditions, increase risk forecasting and potentially raise concerns about debt sustainability, in the absence of offsetting factors.…”

Section: Introductionmentioning

confidence: 99%

Leading approaches for monitoring financial security and maturity of business companies

Charaeva¹,

Карпова²,

Chumachenko³

2019

Proceedings of the 4th International Conference on Social, Business, and Academic Leadership (ICSBAL 2019)

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This paper concentrates on the leading approaches for monitoring the financial soundness of organizations represented by business companies in the context of their financial security. Financial security and maturity of business companies largely rely upon the financial control systems that are envisaged to provide sufficient protection for any company's finances and assets. Generally, financial management involves planning, organization, control, monitoring, and evaluation of an organization's financial resources to achieve its overall goals. In addition, there are a variety of tools to manage organization's financial resources and create a solid financial management system that includes collecting the data, assessment, analysis and learning in order to improve the subsequent iterations Our results demonstrate that financial examiners usually work in one of the two main areas for ensuring maturity and financial security of firms: risk assessment or consumer compliance. We show that financial examiners need a strong analytical ability to assess the risk management efficiency of financial institutions and the safety of individual loans that the institution provides.

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Company stock price reactions to the 2016 election shock: Trump, taxes, and trade

Cited by 193 publications

References 17 publications

Market reactions to unexpected political changes: evidence from advance emerging markets

Market reactions to unexpected political changes: evidence from advance emerging markets

Does Market React to Tax Reduction News? An Empirical Study on Corporate Tax Reduction of Bangladesh in 2017-18

Leading approaches for monitoring financial security and maturity of business companies

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