I am primarily interested in how taxes effect the behaviors and decision making of individuals and firms. I am also interested in externalities caused and abated by public policies, as well as the distributional effects of such policies.
Job Market Paper (click here for link): Do Stock Prices Respond to Changes in Corporate Income Tax Rates?
For public corporations, changes in corporate tax rates may significantly alter future earnings available to shareholders. When these rates are changed, markets should adjust stock prices to reflect the change in capitalization value of future earnings. State corporate income tax rate changes are heterogeneous across states and time. Using stocks where the state-by-state allocation of income can be determined, I examine price responses around the timing of these tax rate changes using event study and differences-in-differences frameworks. I find that the changes in stock prices are much greater than would be expected if profits changed by the full amount of the tax, suggesting additional effects from interstate competition between companies as well as competition between C corporations and pass-through entities. I also find that the timing of these price changes differ for tax cuts and increases, with lawmakers signaling their intentions sooner for tax cuts.