In October 2022 the Norwegian government surprised markets with a 40% resource rent tax proposal on salmon aquaculture—raising the effective tax rate on profits to 62%. The Oslo Seafood Index crashed 21% in a single day, the largest sectoral drop in Norwegian history. This study investigates whether this collapse reflected a rational, permanent repricing of firm values or a temporary overreaction to policy uncertainty.
Using event-study methodology and long-horizon valuation analysis, we document that the initial shock was overwhelmingly persistent: two years post-announcement, salmon firms remained approximately 24% below pre-event levels—representing 93% persistence of the original decline—despite the tax being reduced to 25%. Difference-in-differences confirms Norwegian-exposed firms suffered large negative abnormal returns on announcement day, with no significant reaction upon final enactment in 2023.
The sustained undervaluation reflects investors rationally pricing in both the direct tax burden and indirect operational distortions. The tax relies on a government-administered “norm price” for revenue calculation, discouraging long-term fixed-price contracts and introducing cash flow volatility. Such design features deviate from theoretical tax neutrality (Garnaut, 2010), amplifying uncertainty and raising required returns.
Comparative evidence from Australia’s 2010 mining super-profits tax and Italy’s 2023 bank windfall tax shows similar immediate, firm-specific repricing aligned with expected tax impacts (News, 2010; De Vito et al., 2023). In Norway, high prior profitability and public resource use justified rent capture—but implementation flaws transformed a neutral policy instrument into a source of lasting value destruction.