The Effect of Green Technology Tax Incentive Announcement towards Stock Return in Malaysia

Abstract

The study's focus is to analyze the reaction of stock return among the Industrial Products and Services sector after the announcement of an extension of green technology tax incentive in Malaysia. Therefore the main objective is to investigate the abnormal return existence of stock price of companies in industrial product and services after the announcement of an extension of green technology tax incentives until 2023 (Green Investment Tax Allowance (GITA) and Green Investment Tax Exemption (GITE)). 30% of the businesses listed in Bursa Malaysia in the Industrial Products and Services sector have been sampled. Stock return for 121 trading days from 24 April 2019 until 24 October 2019 retrieved from Thompson Reuters. The announcement made on 10 October 2019 by the ministry of finance, Malaysia. The estimation period for this research is 100 days, and the event window of 21 days. This research found a significant increase in the stock price in the ten days following the announcement, but the stock prices are at or below expectations. This suggests that the stock price is declining after the announcement. The Malaysian government implemented these tax incentives to achieve 20% of the planned renewable energy mix until 2025.