Graduation Year
2026
Date of Defense
4-16-2026
Degree Name
Executive Doctorate of Business Administration (DBA)
Department
Charles F. Dolan School of Business
Document Type
Dissertation
First Advisor
Steven E. Kozlowski
Abstract
This paper examines the impact of the 1% excise tax included in the Inflation Reduction Act of 2022 on share repurchases, effective January 1, 2023. The government enacted this excise tax to encourage companies to use their excess capital for more investment and research. Consistent with Autore et al. (2025), we determined that the tax significantly reduced the level of share repurchases. The analysis is extended by examining subsamples of industries and profitability. The analysis will show that not all industries are affected equally and profitable firms are impacted more than less profitable firms. This is consistent with payout policy theory.
Regression analysis was run on panel data obtained from Compustat for publicly traded firms for the years 2022 and 2023 considering time, industry, and firm fixed effects in various combinations. All firms and the subsample of repurchasing only firms were assessed. The excise tax proved to be negatively significant for repurchasing firms in all scenarios, consistent with the excise tax effectively discouraging such firms from engaging in share buyback activity. The excise tax was significantly negative for all firms when adjusting for time and firm fixed effects.
The main regression was also run on firms divided into industries using the Fama & French twelve industry classification. Most industries were negatively significant at the 1% level for both all and repurchasing firms except energy and telecom. Energy was positively significant at the 1 % level. Telecom, for repurchasing firms only, was positively significant at the 5% level.
Firms were further divided into high and low profitability subsamples to determine if the excise tax impacted firms with a greater capacity for share repurchases more substantially. The excise tax was negatively significant at the 5% level for high profit firms. It was not significant for low profit firms. These findings indicate that firms with greater profitability are more strongly affected by the excise tax.
Overall, the 1% excise tax did decrease the level of share repurchases. Repurchasing firms and profitable firms were more impacted. Profitable repurchasing firms resulted in higher cash balances rather than investing in capital, research and development or employees as policy makers intended. The implication for policy makers is that the tax can deter unwanted behavior but not encourage preferred behavior. Future work should look at a longer post implementation timeline.