Abstract
We analyze stock price reactions to the announcement of the United States Supreme Court decision in South Dakota v. Wayfair, Inc., Overstock.com, Inc., and Newegg, Inc. (hereafter Wayfair), which overturned over 25 years of judicial doctrine related to sales tax nexus. Wayfair's precedent provides a broadening of sales tax nexus and a significant increase in affected firms' compliance costs. Stock returns surrounding the Wayfair decision were, on average, negative, suggesting that investors were concerned about an increase in compliance costs and a decrease in market share. Cross-sectional analyses suggest that the negative reaction manifested primarily among firms operating in industries most affected by the decision and firms with fewer resources. Our results reveal an immediate consequence of the prospect of expanding sales tax nexus is a downward revision in firm valuations.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
