Shareholder Wealth Effects of Border Adjustment Taxation

62 Pages Posted: 24 Apr 2017 Last revised: 4 May 2018

See all articles by Fabio B. Gaertner

Fabio B. Gaertner

University of Wisconsin - Madison - Department of Accounting and Information Systems

Jeffrey L. Hoopes

University of North Carolina (UNC) at Chapel Hill - Accounting Area

Edward L. Maydew

University of North Carolina at Chapel Hill

Date Written: January 25, 2018

Abstract

Following two decades of discussion, the border adjustment tax briefly emerged as part of proposed U.S. corporate tax reform in early 2017. While it was heavily debated, little empirical evidence exists regarding the border adjustment tax. We take advantage of the recent period during which the border adjustment tax was under strong consideration to examine its effects on shareholder value. Contrary to predictions that the tax would be trade neutral, we find firms in high import industries (e.g., retailers), measured using both aggregate government industry data and firm-level shipping container data, suffer negative returns on days the tax had a greater likelihood of adoption. We also find that firms lobbying for border adjustment experience positive returns over that same time period.

Keywords: Border Adjustment Tax, Border Tax, Corporate Tax, Fundamental Tax Reform

JEL Classification: H25, K34

Suggested Citation

Gaertner, Fabio B. and Hoopes, Jeffrey L. and Maydew, Edward L., Shareholder Wealth Effects of Border Adjustment Taxation (January 25, 2018). Kenan Institute of Private Enterprise Research Paper No. 18-2. Available at SSRN: https://ssrn.com/abstract=2956740 or http://dx.doi.org/10.2139/ssrn.2956740

Fabio B. Gaertner

University of Wisconsin - Madison - Department of Accounting and Information Systems ( email )

School of Business
975 University Avenue
Madison, WI 53706
United States

Jeffrey L. Hoopes (Contact Author)

University of North Carolina (UNC) at Chapel Hill - Accounting Area ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

Edward L. Maydew

University of North Carolina at Chapel Hill ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States
919-843-9356 (Phone)

HOME PAGE: http://www.kenan-flagler.unc.edu/faculty/directory/accounting/edward-maydew

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