2017 Tax Cuts and Jobs Act: Effects on Corporate Share Repurchases and Share Value
Open Access
Author:
Laezzo, Gianna R
Area of Honors:
Finance (Behrend)
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
Xin Jessica Zhao, Thesis Supervisor Michael Edward Brown, Thesis Honors Advisor
Keywords:
TCJA AJCA Repatriation Share Repurchase
Abstract:
The Tax Cuts and Jobs Act of 2017 was designed to provide a fiscal stimulus to United States’ citizens, corporations, and the economy at large. A notable aspect of this Act was its permanent elimination of the repatriation tax on multinational corporation’s foreign earnings. Using a standard event study methodology, we find that there were negative but statistically insignificant abnormal returns for companies that announced share repurchases and planned to or actually repatriated funds. However, we do find statistically significant positive abnormal returns surrounding share repurchase announcements for our control groups. These findings suggest that the market may not view share repurchase announcements of companies repatriating funds under the Act as positive signals of the companies’ competitive positions.
