Stock Repurchases and the 2017 Tax Cuts and Jobs Act

57 Pages Posted: 3 Sep 2019 Last revised: 8 Jun 2021

See all articles by Benjamin Bennett

Benjamin Bennett

Tulane University - A.B. Freeman School of Business

Zexi Wang

Lancaster University

Date Written: June 7, 2021

Abstract

We study the effects of the Tax Cuts and Jobs Act (TCJA) on share repurchases, accruals, and other corporate policies. TCJA generates tax windfalls through a repatriation tax cut and an income tax cut. Using monthly repurchase data collected from SEC filings, we find the surge of repurchases following TCJA is driven by the repatriation tax cut, not the income tax cut. Executive incentives matter to TCJA-triggered repurchases. In contrast, the income tax cut leads firms to reduce accruals in the quarter before TCJA and decrease leverage following TCJA. We find no increases in investment or wages.

Keywords: Accruals, Leverage, Repatriation, Repurchase, TCJA

JEL Classification: G35, M41, M48

Suggested Citation

Bennett, Benjamin and Wang, Zexi, Stock Repurchases and the 2017 Tax Cuts and Jobs Act (June 7, 2021). Available at SSRN: https://ssrn.com/abstract=3443656 or http://dx.doi.org/10.2139/ssrn.3443656

Benjamin Bennett (Contact Author)

Tulane University - A.B. Freeman School of Business ( email )

7 McAlister Drive
New Orleans, LA 70118
United States

HOME PAGE: https://sites.google.com/site/benjaminbennettfinance/home

Zexi Wang

Lancaster University ( email )

Lancaster University Management School
Bailrigg
Lancaster, LA1 4YX
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
642
Abstract Views
2,659
rank
57,918
PlumX Metrics