Investor Perceptions of the Corporate Alternative Minimum Tax

• 成果类型: Article
• 署名作者: Gaertner, Fabio B.; Hoopes, Jeffrey L.; Kelley, Stacie O.; Pflitsch, Max
• 署名单位: University of Wisconsin System; University of Wisconsin Madison; University of North Carolina; University of North Carolina Chapel Hill; University of North Carolina School of Medicine; Dortmund University of Technology
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2024.04750
• 发表日期: 2025
• 关键词: book minimum tax; corporate alternative minimum tax; Inflation Reduction Act

摘要

The Inflation Reduction Act establishes a new 15% corporate minimum tax on the adjusted financial accounting income for large U.S. corporations. Although the minimum tax is estimated to raise $222 billion over 10 years, some fear firms will manipulate their accounting earnings to reduce their tax liabilities, resulting in less revenue raised. Using an event study, we examine the extent to which investors believe this tax will reduce firm value. We examine stock market reactions around key legislative developments leading to the enactment of the book minimum tax. Our findings show targeted firms experience significantly lower stock returns than nontargeted firms during the enactment process (about 1.4%-1.8% of firm value). In aggregate, our findings are consistent with the Joint Committee on Taxation's revenue estimates. In cross-sectional tests, we fail to find evidence that firms most likely to avoid the tax via earnings management experience more positive returns. We also fail to find less negative returns for firms most likely to pass on the tax to consumers. Overall, our results suggest investors do not expect firms to avoid this tax. Instead, they appear to expect a significant portion of the corporate minimum tax to be remitted by firms and borne by shareholders.