Stock Market Reactions To the Tax Reform Act of 1986: an Analysis of the Agribusiness Industry

Abstract

This study assesses the impact of tax legislation on the agribusiness industry by examining security price behavior at major stages in the development of the Tax Reform Act of 1986. The findings of the study indicate that investors in agribusiness firms responded negatively to proposed tax changes as the legislation evolved. The market reaction to the legislative developments indicates that tax-driven investment in the agribusiness industry will be significantly reduced.