Firms' responses to anticipated reductions in tax rates: the Tax Reform Act of 1986

Article Abstract:

The responses of firms to a known schedule of declining tax rates provided for by the Tax Reform Act of 1986 (TRA 86) were examined. TRA 86 reduced tax rates for companies depending on the fiscal year-ends. For instance, tax rates for companies with fiscal year ending Dec 1987 were decreased from 46% to 40% while those firms with fiscal year ending on Jun 1987 had reduced tax rates from 46% to 34%. Two models assessing whether firms shifted income to future periods in anticipation of lower tax rates were applied in a sample of 812 firms. The first model showed that firms deferred gross margins until tax rates were decreased although selling, general and administrative (SG&A) expense deductions for one quarter were not manipulated. The second model showed that companies accelerated SG&A deductions, deferred sales reports or both in anticipation of lower tax rates.

Management, Tax planning, Tax reform, Corporations, Tax policy

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Attributes of news about firms: an analysis of firm-specific news reported in the Wall Street Journal Index

Article Abstract:

A model database is created for firm-specific business news, using primary sources such as the Wall Street Journal Index (WSJI) and the Dow Jones News Service (DJNS). No single source of accurate, up-to-date, firm-specific news currently exists. Certain types of business news are reported in both WSJI and DJNS, but with significant variation in the number of items and the frequency of reporting. Coverage also varies on the basis of the types of reports. For example, earnings and dividends announcements are frequently reported in the WSJI, but there are fewer forecasting and-or analysis articles. The WSJI and the DJNS often carry the same news, but neither could supplant the other.

Analysis, Statistics, The Wall Street Journal (Newspaper), Business journalism, Dow Jones News-Retrieval (Information retrieval system)

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