Losses never sleep: The effect of tax loss offset on stock market returns during economic crises

Arbeitspapier

We analyze to what extent more generous tax loss offset regulations are associated with a weaker decline and stronger recovery of firm stock prices during economic crises. We argue that an unrestricted loss carryforward and, particularly, an unrestricted loss carryback provides firms with additional liquidity, which should lower the risk of bankruptcy and can be used for investment purposes. Our empirical findings document that (1) an unrestricted loss carryforward and an unrestricted loss carryback result in a weaker decline and more timely recovery of stock prices during the considered crises, (2) this effect is stronger in high-tax countries, and (3) this effect is also dependent upon pre-crisis profitability.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: arqus Discussion Paper ; No. 269

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Business Taxes and Subsidies including sales and value-added (VAT) ; Financial Crises
• Thema: tax loss offset ; economic crisis ; firm performance

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Koch, Reinald ; Holtmann, Svea ; Giese, Henning
• Ereignis: Veröffentlichung
• (wer): Arbeitskreis Quantitative Steuerlehre (arqus)
• (wo): Berlin
• (wann): 2022

Weitere Informationen

• Handle: http://hdl.handle.net/10419/253647
• Letzte Aktualisierung: 10.03.2025, 11:45 MEZ