"News--or foresight--about future economic fundamentals can create rational expectations equilibria with non-fundamental representations that pose substantial challenges to econometric efforts to recover the structural shocks to which economic agents react. Using tax policies as a leading...

We investigate whether industry tax planning affects a firm's cost of capital by increasing its exposure to tax policy risk. We find evidence that equity returns increase with the propensity for tax planning in a firm's industry. Consistent with a policy risk interpretation, the magnitude of the...

The purpose of this study was to test the effects of taxable income and accounting income on stock returns, and to prove whether the information content in the high tax planning firms, lower than low tax planning firms. From the sample of 23 firms with high tax planning categories and 23 firms...