Impact of India’s 2019 Corporate Tax Cut Announcement on the Stock Market

Authors

  •   Chandan Sharma Assistant Professor, Delhi School of Management, Delhi Technological University, New Delhi - 110 042

DOI:

https://doi.org/10.17010/ijf/2022/v16i2/162839

Keywords:

Event Study

, Corporate Tax Cut, Industry Analysis, India, Stock Markets, Abnormal Returns.

JEL Classification Codes

, G12, G14, H25.

Paper Submission Date

, May 25, 2021, Paper Sent Back for Revision, January 2, 2022, Paper Acceptance Date, January 25, Paper Published Online, February 15, 2022.

Abstract

The paper analyzed the short-term impact of India’s corporate tax cut announcement in 2019 on the Indian stock market. The paper utilized event study methodology to analyze how stocks across industries reacted to the unexpected announcement of the corporate tax cut. The paper found heterogeneity in the abnormal stock returns across industries due to the announcement. Automobile, cement, construction, consumer goods, financial services, and consumer services saw positive abnormal returns due to the announcement. In contrast, power, information technology, and the pharmaceutical industries saw negative abnormal returns. This asymmetry in the stock returns was explained based on companies’ differential corporate tax rates.

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Author Biography

Chandan Sharma, Assistant Professor, Delhi School of Management, Delhi Technological University, New Delhi - 110 042

Chandan Sharma is an Assistant Professor, Delhi School of Management,  Delhi Technological University, Delhi, India. He has been engaged in the teaching of finance and related areas to post-graduate students. His principal areas of interest include corporate finance, credit risk, and valuation.

 

ORCID iD : https://orcid.org/0000-0003-4725-1715

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Published

2022-02-14

How to Cite

Sharma, C. (2022). Impact of India’s 2019 Corporate Tax Cut Announcement on the Stock Market. Indian Journal of Finance, 16(2), 24–36. https://doi.org/10.17010/ijf/2022/v16i2/162839

Issue

Volume 16, Issue 2, February 2022

Section

Articles
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