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Taxation, Dividends, and Share Repurchases: Taking Evidence Global
EBS Universität für Wirtschaft und Recht, EBS Business School.
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics, Uppsala Center for Fiscal Studies.
2010 (English)Report (Other academic)
Abstract [en]

We compile a comprehensive international dividend and capital gains tax data set to study tax explanations of corporate payouts for a panel of 5,767 firms from 25 countries for 1990-2008. We find robust evidence that the tax penalty on dividends versus capital gains is statistically significant and negatively related to firms’ propensity to pay dividends, initiate such payments, and the amount of dividends paid. Our analysis further reveals that an increase in the dividend tax penalty raises firms’ likelihood to repurchase shares, initiate such repurchases, and the amount of shares repurchased. This is strong confirming evidence that when listed industrial firms globally design their payout policies, they take into careful consideration the relative tax implications of their payout choices.

Place, publisher, year, edition, pages
Uppsala, 2010. , 41 p.
, Working Paper,/Uppsala Center for Fiscal Studies, Uppsala University, 2010:10
Keyword [en]
Taxation, Dividends, Stock Repurchases, Payout Policy
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Research subject
URN: urn:nbn:se:uu:diva-131120OAI: oai:DiVA.org:uu-131120DiVA: diva2:352957
Available from: 2010-09-23 Created: 2010-09-23 Last updated: 2010-11-17Bibliographically approved

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