Ring-fencing digital corporations: Investor reaction to the European Commission’s digital tax proposals

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Additional URL:	https://ntanet.org/conference/2020/03/112th-annual...
Document Type:	Conference or workshop publication
Year of publication:	2020
Book title:	112th Annual Conference Proceedings, 2019 : November 21-23, 2019, Tampa, FL
Page range:	Paper 3367
Conference title:	112th Annual Conference on Taxation NTA 2019
Location of the conference venue:	Tampa, FL
Date of the conference:	21.-23.11.2019
Place of publication:	Washington, DC
Publishing house:	National Tax Association NTA
Publication language:	English
Institution:	Business School > ABWL u. Betriebswirtschaftliche Steuerlehre II (Spengel 2006-)
Subject:	330 Economics
Abstract:	We study the effect of digital tax measures on firm value. By employing an event study methodology, we analyze investor reaction to the European Commission’s proposals on the taxation of digital corporations. Examining the stock returns of potentially affected corporations surrounding the draft directives’ release, we find a significant abnormal capital market reaction of -0.692 percentage points. The investor reaction is more pronounced for firms that engage more actively in tax avoidance, have a higher profit shifting potential, and for those with higher exposure to the EU. The market value of digital and innovative corporations decreased by at least 52 billion euro in excess of the regular market movement during the event window. Overall, our study reveals that expectations about ringfencing digital tax measures impact firm values.
Additional information:	Online-Ressource