The Australian equity market reaction to the 2010 resource tax announcements

Galanos, G 2018, The Australian equity market reaction to the 2010 resource tax announcements, Doctor of Philosophy (PhD), Economics, Finance and Marketing, RMIT University.

Document type: Thesis
Collection: Theses

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Title The Australian equity market reaction to the 2010 resource tax announcements
Author(s) Galanos, G
Year 2018
Abstract This thesis analyses the Australian resources equity market reaction to the 2010 resource tax announcements. These taxes were explicitly designed to meet tax neutrality conditions. Tax neutrality implies that taxes should not incur substitution effects that result in economic inefficiency. These taxes were intended to generate revenue (i.e., an income effect) while not distorting economic incentives.

First, this thesis analyses the neutrality conditions from a theoretical point of view. It then examines the design of the proposed resource taxes and assesses whether the neutrality conditions were met and investigates the equity market reaction to the proposed tax reforms.

Using an event study (price-based) methodology, evidence of the existence of a sizeable and statistically significant negative abnormal return is found, demonstrating the existence of a negative income effect. A cross-sectional analysis, however, also reveals a substitution effect; that is, differential effects across firm size, maturity levels, operational focus and other variables.

These findings thus reject the hypothesis (and stated benefit) that the 2010 resource taxes were tax neutral.

These results provide valuable information on the impact of these sorts of taxes to assist current and/or future governments throughout the world in developing taxation policies in relation to the resource sector.
Degree Doctor of Philosophy (PhD)
Institution RMIT University
School, Department or Centre Economics, Finance and Marketing
Subjects Finance
Financial Econometrics
Public Economics- Taxation and Revenue
Environment and Resource Economics
Keyword(s) Resource Super Profits Tax
Minerals Resource Rent Tax
Tax neutrality
Event study
Substitution effect
Income effect
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Created: Mon, 03 Dec 2018, 14:16:12 EST by Keely Chapman
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