The Effect Of Profit-Seeking Enterprise Income Tax Reduction On Stock Returns Of Listed Companies In Taiwan

• Main Authors: Hsu, Pohsuan, 徐博軒
• Other Authors: Lin, Wenchang
• Format: Others
• Language: zh-TW
• Published: 2012
• Online Access: http://ndltd.ncl.edu.tw/handle/39349609713889451226

碩士 === 國立中正大學 === 財務金融研究所 === 100 === The aim of this thesis is to investigate the impact of reducing profit-seeking enterprise income tax during 2009 and 2010 on the stock returns of listed companies. By using event study method, this thesis evaluates the influence of this tax reduction. As there are two event days, March 5, 2009 and 2010 April 12, 2010, this thesis thus conducts a cross-sectional regression to analyze whether stock market react to the two events differently. The empirical results reveals that the announcement of profit-seeking enterprise income tax reduction has a positive impact on the stock returns of listed companies, and the extent of the abnormal returns significantly differ between industries. I find that the stock returns of the electronics industry is relatively more sensitive to the tax reduction in comparison with the traditional industry and the financial industry while the stock-return sensitivity of the financial industry to tax reduction is lowest. In addition, I also find that stock prices are relatively insensitive to the announcement in 2010 compared to that in 2009. I also find that the size effect is evident in the Taiwan stock market. Finally, I find that firm size, leverage ratio, and industry dummy and event date can plausibly explain the abnormal returns.