Giacomo Brusco, University of Michigan. "Tax Reform and the Valuation of Superstar Firms"
Job talk. Giacomo Brusco is a PhD student at the University of Michigan. He will present the paper: "Tax Reform and the Valuation of Superstar Firms".
This paper measures the effect of the 2017 Tax Cuts and Jobs Act on share prices of publicly traded firms, finding that the most profitable firms, and those in concentrated industries, benefited the most. The tax bill significantly reduced corporate tax rates, thereby increasing share prices, particularly at the top. Among firms with the highest profit rates, more than 80 percent rose in value on news of the tax reform, whereas among less profitable firms, fewer than 60 percent appreciated. By every measure, stock market gains coincident with the tax bill were concentrated among firms with greater market power. This pattern is consistent with economic rents being important components of the values of large U.S. corporations.