(Un)intended consequences? The impact of the 2017 tax cuts and jobs act on shareholder wealth

Ivalina Kalcheva, James M. Plečnik, Hai Tran, Jason Turkiela

Research output: Contribution to journalArticlepeer-review

10 Scopus citations


We study the stock market reactions to the Tax Cuts and Jobs Act (TCJA), the most significant structural U.S. tax reform in over 30 years. In line with the stated intent of TCJA proponents, we find that the Act benefited highly taxed firms. However, the Act hindered firms with international operations as well as firms with high interest expense and tax losses. Counter to claims that the TCJA would quickly spur economic growth, we find that financially constrained and high growth opportunity firms did not benefit. Rather, market participants anticipate that most of the TCJA's benefits will be passed on to shareholders via higher corporate payouts. We confirm these market expectations by documenting that firms did increase payouts via repurchases after the TCJA, but did not increase their corporate investments.

Original languageEnglish (US)
Article number105860
JournalJournal of Banking and Finance
StatePublished - Sep 2020

Bibliographical note

Publisher Copyright:
© 2020 Elsevier B.V.


  • Stock returns
  • Tax Cuts and Jobs Act
  • Taxes, Event study

PubMed: MeSH publication types

  • Journal Article


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