Author(s):	Alexander F Wagner, Richard Zeckhauser, Alexandre Ziegler
Publication Date:	February 2017
Date Revised:	July 2017
Keyword(s):	corporate interest payments, corporate taxes, election surprise, event study, post-news drift, Stock returns, trade policy
JEL(s):	G12, G14, H25, O24
Programme Areas:	Financial Economics
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=11837

Donald Trump?s surprise election shifted expectations: corporate taxes would be lower and trade policies more restrictive. Relative stock prices responded appropriately. High-tax firms and those with large deferred tax liabilities (DTLs) gained; those with significant deferred tax assets from net operating loss carryforwards (NOL DTAs) lost. Domestically-focused companies fared better than internationally-oriented firms. A price contribution analysis shows that easily-assessed consequences (DTLs, NOL DTAs, cash tax rates) were priced faster than more complex issues (net DTLs, GAAP tax rates, foreign exposure). High-tax firms outperformed (underperformed) on days when the media attended more (less) to corporate taxes.