We examine whether option prices reflect investor taxes. Existing empirical option pricing literature ignores the potentially important impact of taxes. To assess the effect of investor taxes on option prices, we exploit a unique setting where “index” options on the S&P 500 Index (SPX) and...

Prior research finds that firms pay dividends prior to tax rate increases (“dividend acceleration”), especially when insider ownership is high (Hanlon and Hoopes 2014). However, this research does not consider the preferences of other investors, many of which are tax-insensitive. On average,...

A growing body of work examines market and firm responses to specific tax benefits. We extend this literature by examining market and firm reactions to an economically significant targeted tax refund granted to a few large, but poorly performing, steel firms by the Tax Reform Act of 1986...

We identify a specific, book-tax conforming tax planning strategy and examine its effects. Unlike most countries, Luxembourg allows tax deductions for financial statement goodwill impairments, enabling firms to implement a tax strategy that can provide both cash and financial reporting tax...

Prior research finds that firms pay special dividends before a dividend tax increase. We examine the real effects of this decision, finding that firms incur costs to pay these tax-motivated special dividends. Specifically, firms reduce investment and repurchases to pay these dividends. Further,...

We provide historical context to assess the implications of the Tax Cuts and Jobs Act of 2017 (TCJA) on organizational form. We review the Tax Reform Act of 1986 (TRA86) to assess the extent of organizational form changes in response to changing tax incentives and the effects of those...

Economic theory suggests that tax-favored strategies attract investment, and this increased investment demand offsets tax benefits through lower pre-tax returns (i.e., implicit taxes). We propose that aggressive strategies that generate uncertain tax benefits have lower demand due to both the...