Market and Firm Reaction to Targeted Tax Benefits: Evidence from the Tax Reform Act of 1986
研究1986年税收改革法案对几家大型但业绩不佳的钢铁企业定向退税的市场反应，发现退税主要用于偿还债务而非投资或分红，对目标企业经济收益有限。
ABSTRACT A growing body of work examines market and firm responses to specific tax benefits. We extend this literature by examining market and firm reactions to an economically significant targeted tax refund granted to a few large, but poorly performing, steel firms by the Tax Reform Act of 1986 (TRA86). We find, relative to steel firms not receiving the refund, qualifying firms experience either a negative or insignificant market reaction around each of three key dates in the TRA86 legislative process. Using difference-in-differences analyses to test a variety of refund uses, we find that refund recipients use the proceeds to pay down debt rather than to increase capital assets, payouts to shareholders, acquisitions, or employment. Overall, we find targeted tax benefits granted to significant but struggling firms, while potentially politically appealing, appear to generate limited economic benefits to those targeted firms. Data Availability: Data used in this study are available from public sources identified in the text. JEL Classifications: H25.