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The Effect of Changes in the Percentage Depletion Allowance on Oil Firm Stock Prices

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  • Andrew B. Lyon

Abstract

In this paper I examine the effect of changes in tax laws on the value of firm stock prices. The behavior of oil firm stock prices in 1969 (at the time of congressional votes to reduce the percentage depletion allowance) is studied to test the hypothesis that this legislation resulted in a decline in the value of oilfirms. The empirical results show that statistically significant declines in the average value of oil firm stock prices did occur at the time of House and Senate committee votes. Cross-sectional tests show a significant correlation between the measured declines for individual firms and the expected declines predicted for those firms in the period surrounding one of the two committee votes.

Suggested Citation

  • Andrew B. Lyon, 1989. "The Effect of Changes in the Percentage Depletion Allowance on Oil Firm Stock Prices," The Energy Journal, , vol. 10(4), pages 101-117, October.
    • Handle: RePEc:sae:enejou:v:10:y:1989:i:4:p:101-117
    DOI: 10.5547/ISSN0195-6574-EJ-Vol10-No4-7
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    References listed on IDEAS

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    1. Walter J. Mead & Dennis D. Muraoka, 1985. "Sensitivity of Rates of Return and Output to Alternative Tax Scenarios: The Case of the U.S. Gulf of Mexico OCS," The Energy Journal, International Association for Energy Economics, vol. 0(Special I).
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    Cited by:

    1. Pierre Guérin & Danilo Leiva-Leon, 2017. "Monetary policy, stock market and sectoral comovement," Working Papers 1731, Banco de España.

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      More about this item

      Keywords

      Oil companies; Stock prices; Depletion allowance; Taxes;
      All these keywords.

      JEL classification:

      • F0 - International Economics - - General

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