Purpose

This paper analyzes the effect of corporate tax cuts on the competitiveness of the tax-cutting countries and neighbor countries.

Design/methodology/approach

This study utilizes four significant corporate tax reforms among the OECD countries in Europe that offer a one-time tax cut of 6% or more. The short-term event study approach examines the stock index reactions for both the tax-cutting countries and the other countries. Multivariate fixed-effect regressions are employed to study the cross-sectional variations in the non-tax-cut countries.

Findings

This paper finds positive excess returns for Slovakia and Germany around the tax-cut passage. Multivariate analysis of stock market reactions of the non-tax-cutting countries reveals some evidence supporting both the positive spillover effect and the negative competitive loss effect. More advanced countries are more likely to experience higher abnormal returns, while higher tax countries are more likely to suffer lower abnormal returns. Other factors identified that might have influenced the effect of a foreign tax cut include the existing trade flows with the tax-cutting countries, whether the country has a common currency and the export orientation of the economy.

Research limitations/implications

The findings are subject to sample-size issues. The lack of results for the other two countries is due to complicating events, as suggested by the further investigation of concurrent news events around the event days.

Practical implications

The simultaneous analysis of the reform countries and the other countries in the region suggests that policymakers need to consider the relative positioning of their country vs the other countries in terms of economic development and current tax burdens when determining the optimal policy for their country or to respond to the tax policy changes in the other countries.

Originality/value

This study offers empirical evidence regarding the effect of corporate tax changes on competitiveness through the lens of stock markets' reactions, which depend on the net results of the spillover gain vs the competitive loss.

中文翻译：

---

谢谢，邻居！欧洲大幅减税的股市经验

目的

本文分析了企业减税对减税国和邻国竞争力的影响。

设计/方法/方法

本研究利用了欧洲经合组织国家中的四项重大公司税改革，这些改革提供了 6% 或更多的一次性减税。短期事件研究方法检查减税国家和其他国家的股票指数反应。多元固定效应回归用于研究非减税国家的横截面变化。

发现

本文发现斯洛伐克和德国在减税通道附近的超额收益为正。对非减税国家股票市场反应的多元分析揭示了一些支持正溢出效应和负竞争损失效应的证据。更先进的国家更有可能经历更高的异常收益，而税收较高的国家更有可能遭受更低的异常收益。确定可能影响外国减税效果的其他因素包括与减税国家的现有贸易流量、该国是否有共同货币以及经济的出口导向。

研究限制/影响

调查结果受样本量问题的影响。其他两个国家缺乏结果是由于事件复杂化，正如对活动日前后同时发生的新闻事件的进一步调查所表明的那样。

实际影响

对改革国家和该地区其他国家的同时分析表明，决策者在确定本国的最佳政策或应对时，需要考虑本国与其他国家在经济发展和当前税收负担方面的相对定位。其他国家税收政策的变化。

原创性/价值

本研究通过股票市场的反应提供了关于公司税变化对竞争力影响的经验证据，这取决于溢出收益与竞争损失的净结果。