This study assesses the impact of tax legislation on the agribusiness industry by examining security price behavior at major stages in the development of the Tax Reform Act of 1986. The findings of the study indicate that investors in agribusiness firms responded negatively to proposed tax changes as the legislation evolved. The market reaction to the legislative developments indicates that tax-driven investment in the agribusiness industry will be significantly reduced.

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According to the new Internal Revenue Code Section 263-A, businesses with sales of more than $10 million are now required to capitalize more cost into inventory than ever before. This paper analyzes the implementation of the new requirements and then presents the results of a survey of 100 of the largest industrial firms concerning the new procedures.

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