This paper examines tax arbitrage in the market for municipal bonds. It poses a puzzle for the literature, however, in that we find little evidence of municipal bond tax arbitrage by non-financial corporations. Even among those firms engaged in arbitrage, many firms do less than a safe-harbor...

The theory of tax clienteles for dividend policies predicts that after a firm initiates a cash dividend, the ownership of its equity by tax-exempt/tax-deferred and corporate investors will increase as these investors purchase shares of stock that are being sold by individual investors for whom...