Shareholder Reactions to Judicial Decisions Affecting Sales Tax and Direct Marketing Activities

Abstract

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt; mso-pagination: none;"><span style="font-size: 10pt;"><span style="font-family: Times New Roman;">This study examines shareholder reactions to judicial decisions that affect sales tax collection by firms conducting direct marketing activities.<span style="mso-spacerun: yes;">  </span>Abnormal returns are measured for four dates related to the 1992 United States Supreme Court decision in Quill.<span style="mso-spacerun: yes;">  </span>Results do not indicate statistically significant returns, but some tests indicate differential firm reactions.<span style="mso-spacerun: yes;">  </span>Therefore, abnormal returns are also calculated for subsets of firms that are relatively more affected by the court decisions, but no statistically significant results are obtained.<span style="mso-spacerun: yes;">  </span>More research is needed in order to determine whether sales tax avoidance is a meaningful incentive for mail order and Internet purchasers.</span></span></p>