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Journal of Accounting Research Vol. 40 No. 1 2002

Intertemporal Tax Discontinuities

Douglas A. Shackelford1; Robert E. Verrecchia2,3

1 University of North Carolina · 2 California University of Pennsylvania · 3 University of Pennsylvania

Abstract

We define an intertemporal tax discontinuity (ITD) as a circumstance in which different tax rates are applied to gains realized at one point in time versus some other point in time. We study the effects of ITDs on market behaviors at the time of disclosures of firm performance, assuming that all investors who trade firm equities are subject to tax. The results of our paper suggest that relative to an economy in which ITDs are absent, ITDs may dampen trading volume and amplify price changes at the time of disclosure.

DOI
10.1111/1475-679x.00044
Volume
40
Issue
1
Pages
205-222
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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