{"title":"Losses never sleep - The effect of tax loss offset on stock market returns during economic crises.","authors":"Reinald Koch, Svea Holtmann, Henning Giese","doi":"10.1007/s11573-022-01134-4","DOIUrl":null,"url":null,"abstract":"<p><p>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.</p>","PeriodicalId":13421,"journal":{"name":"IEEE Transactions on Vehicular Technology","volume":"68 1","pages":"59-109"},"PeriodicalIF":6.1000,"publicationDate":"2023-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9884073/pdf/","citationCount":"1","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"IEEE Transactions on Vehicular Technology","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1007/s11573-022-01134-4","RegionNum":2,"RegionCategory":"计算机科学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"2023/1/28 0:00:00","PubModel":"Epub","JCR":"Q1","JCRName":"ENGINEERING, ELECTRICAL & ELECTRONIC","Score":null,"Total":0}
引用次数: 1
Abstract
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.
期刊介绍:
The scope of the Transactions is threefold (which was approved by the IEEE Periodicals Committee in 1967) and is published on the journal website as follows: Communications: The use of mobile radio on land, sea, and air, including cellular radio, two-way radio, and one-way radio, with applications to dispatch and control vehicles, mobile radiotelephone, radio paging, and status monitoring and reporting. Related areas include spectrum usage, component radio equipment such as cavities and antennas, compute control for radio systems, digital modulation and transmission techniques, mobile radio circuit design, radio propagation for vehicular communications, effects of ignition noise and radio frequency interference, and consideration of the vehicle as part of the radio operating environment. Transportation Systems: The use of electronic technology for the control of ground transportation systems including, but not limited to, traffic aid systems; traffic control systems; automatic vehicle identification, location, and monitoring systems; automated transport systems, with single and multiple vehicle control; and moving walkways or people-movers. Vehicular Electronics: The use of electronic or electrical components and systems for control, propulsion, or auxiliary functions, including but not limited to, electronic controls for engineer, drive train, convenience, safety, and other vehicle systems; sensors, actuators, and microprocessors for onboard use; electronic fuel control systems; vehicle electrical components and systems collision avoidance systems; electromagnetic compatibility in the vehicle environment; and electric vehicles and controls.