Measuring the Expected Effects of the Global Tax Reform

Review of Financial Studies

86 Pages Posted: 11 Mar 2022 Last revised: 22 Mar 2023

See all articles by Roberto Gomez Cram

Roberto Gomez Cram

New York University (NYU) - Leonard N. Stern School of Business

Marcel Olbert

London Business School; ZEW – Leibniz Centre for European Economic Research - Corporate Taxation and Public Finance Research

Date Written: March 20, 2023

Abstract

Over 140 countries agreed on a fundamental corporate tax reform in 2021 to be implemented in 2023 and beyond. To measure its potential effects, we study asset price changes within minutes of the reform announcements. We construct proxies for the reform's costs regarding U.S. companies' tax burdens and countries' public finances. Likely exposed companies exhibit significant negative stock returns. Our lower-bound estimates indicate total shareholder value losses of $112.6 billion one day after the reform announcements. Further, likely exposed countries experience increases in sovereign debt credit risk. Our findings inform the cost-benefit analysis of a historical international tax reform.

Keywords: International tax reform, asset prices, regulation, tax avoidance, tax competition, high-frequency identification

JEL Classification: H20, H25, H26, G12, E44

Suggested Citation

Gomez Cram, Roberto and Olbert, Marcel, Measuring the Expected Effects of the Global Tax Reform (March 20, 2023). Review of Financial Studies , Available at SSRN: https://ssrn.com/abstract=4052575 or http://dx.doi.org/10.2139/ssrn.4052575

Roberto Gomez Cram

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

Marcel Olbert (Contact Author)

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

ZEW – Leibniz Centre for European Economic Research - Corporate Taxation and Public Finance Research ( email )

United States

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