The Stock Markets Reaction to the Capital Gains Tax Overhaul: Evidence from Taiwan
| Autor: | Shi-ping Wu, 吳詩萍 |
|---|---|
| Rok vydání: | 2014 |
| Druh dokumentu: | 學位論文 ; thesis |
| Popis: | 102 For a very long time, individual investors in Taiwan did not have the responsibility to pay income tax on their net capital gains. After Tax Reform Committee announced the Tax Reform Act 2012 (TRA''12) which would impose tax on stock capital gains, included an 8500-point TAIEX threshold for individual investors, the economy immediately went from bad to worse. A year after, Taiwan government introduced an amendment to TRA''12, which in this paper we called Tax Reform Act 2013 (TRA''13), turning the individual investors to be exempt from capital gains tax just like before. This paper examines daily stock return and share turnover reactions to the 2012－2013 capital gains tax overhaul. Using event study methodology, the analysis shows a significantly negative abnormal return and abnormal turnover in stock markets during the announcement date of TRA''12, which we infer to as a bad news; and there is a significantly positive abnormal return and abnormal turnover during the announcement date of TRA''13, which we infer to as good news. Besides, the empirical results indicate that investors change their stock-picking strategies when facing good news or bad news. They would invest in dividend-paying value stocks when there are bad news, and invest in growth stocks when there are good news. Besides investors would change their preferences between dividends and capital gains depending on the new tax rules. |
| Databáze: | Networked Digital Library of Theses & Dissertations |
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