Stamp Duty on Shares and Its Effect on Share Prices

Steve Bond, Mike Hawkins and Alexander Klemm

FinanzArchiv: Public Finance Analysis, 2005, vol. 61, issue 3, 275-297

Abstract: This paper provides an empirical study of the effect of a transaction tax on share prices, using changes in the rate of stamp duty in the UK as quasi-experiments. Because the impact of a stamp duty is expected to depend on how frequently particular shares are traded, we employ a difference-of-differences methodology. We find that announcements of reductions in stamp duty had a significant and positive effect on the price of more frequently traded shares compared to less frequently traded shares. As expected under the efficient-markets hypothesis, the subsequent implementation of previously announced cuts did not affect returns differentially.

Keywords: stamp duty; transaction tax; quasi-experiment; tax reform (search for similar items in EconPapers)
JEL-codes: E62 G14 H29 (search for similar items in EconPapers)
Date: 2005
References: Add references at CitEc
Citations: View citations in EconPapers (19)

Downloads: (external link)
https://www.mohrsiebeck.com/en/article/stamp-duty- ... 28001522105774979010
Fulltext access is included for subscribers to the printed version.

Related works:
Working Paper: Stamp duty on shares and its effect on share prices (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mhr:finarc:urn:sici:0015-2218(200511)61:3_275:sdosai_2.0.tx_2-v

Ordering information: This journal article can be ordered from
Mohr Siebeck GmbH & Co. KG, P.O.Box 2040, 72010 Tübingen, Germany

Access Statistics for this article

FinanzArchiv: Public Finance Analysis is currently edited by Alfons Weichenrieder, Ronnie Schöb and Jean-François Tremblay

More articles in FinanzArchiv: Public Finance Analysis from Mohr Siebeck, Tübingen
Bibliographic data for series maintained by Thomas Wolpert ().