Impacts of the corporate income tax change on asset prices in Turkey

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Tezin Türü: Yüksek Lisans

Tezin Yürütüldüğü Kurum: Orta Doğu Teknik Üniversitesi, İktisadi ve İdari Bilimler Fakültesi, İktisat Bölümü, Türkiye

Tezin Onay Tarihi: 2014

Öğrenci: SAMET KÜTÜK

Danışman: PINAR DERİN GÜRE

Özet:

The aim of this paper is to analyze impacts of the announcement of the corporate income tax change on asset prices in Turkey in 2005. Prime Minister of Turkey in his speech in his political party group meeting in Turkish Grand National Assembly announced the decline in corporate income tax rate on November 29, 2005. He indicated that the corporate tax rate would be decreased from 30% to 20% starting from the next year. In line with the market efficiency hypothesis, we use event study methodology to measure the effects of this announcement on asset prices. To the best of our knowledge, we are the first to analyze impacts of the announcement of the corporate income tax change in Turkey in 2005 on asset prices using substantially large data sets. Kandır and Yakar (2012) investigates the same announcement with quite small sample set which contains only five companies among highest corporate income tax payers in Istanbul Stock Exchange Market and they conclude that reaction of stock returns are significant. We obtain that there is no significant change in asset prices in the event period using two different large sample sets and three different methodologies. This result is parallel to the fact that asset prices in semi-efficient stock markets reflect publicly available information.