The Impact of Capital Tax on Borsa Istanbul: Event Study Analysis

Abstract Rumors about changes in tax policies have the potential to have sudden and significant effects on financial markets. This study aims to analyze the effects of tax rumors on Borsa Istanbul (BIST). The study selects certain tax rumors as event days, and their impact on BIST is analyzed. The dates in question are June 4, 2024, which is the beginning of the rumors that the earnings from the transactions on BIST will be taxed, and June 13, 2024, when the postponement was announced. In addition to these days, November 30, 2023 is included in the analysis as a different tax rumor for control purposes. The event window is defined as a period covering the day of the event and (-5,+5) days before and after the event. As a result of the analysis, it is found that the tax rumors on June 4, 2024 have a significant effect on BIST. However, the announcement of the postponement of the tax on June 13, 2024 does not have a significant effect on BIST. On November 30, 2023, the tax rumor also significantly affected the stock market. Both tax rumors affected the stock market, indicating that BIST is inefficient in the semi-strong form. This shows that negative news affects the markets more rapidly. On the other hand, the rumor that the tax was postponed did not have a significant positive effect. As a result, it is concluded that negative news affects the markets more than positive news. These findings reveal the critical role of expectations and rumors about tax policies on market dynamics. Taxation of capital should be considered from economic policy and social justice perspectives. Tax policies can channel capital flows, stimulate or inhibit economic growth, and affect income distribution. The taxation of capital should be considered from both an economic policy and social justice perspective. Tax policies can channel capital flows, stimulate or inhibit economic growth and affect income distribution. Therefore, decisions on capital taxation require careful analysis and a broad economic perspective.