The Impacts of Tax Reforms on REITs. An International Empirical Study

Tax exemption is one of the REIT’s most unique characteristics. To improve the development of REITs market, the Congress had passed several Tax Reform Acts. Plenty of previous study had already explored the effects of tax legislation changing on REITs market. However the findings had not come to consensus. This might because most of them explored this topic by event study, which cannot control other events happening on the even dates. This paper tries to avoid the complications encountered in previous research by investigating the tax reform effects through the normal panel model with the data in the United States and then retest the hypothesis by a novel empirical model with panel market data in both U.S. and Australia. The results provide evidence that the Tax Reforms would truly affect the REIT’s performance with more solid empirical evidences. Furthermore, the results shed light on the tax policy and governance of a REITs market.