Recent literature has estimated that the 2003 dividend tax cut caused a large increase in aggregate dividend payouts, which would imply that dividend taxation creates large efficiency costs relative to the amount of revenue raised. I document that dividend payouts by real estate investment...

Dividends are taxed at the investor level, but injecting funds into firms does not offer investors the symmetric tax benefit. Hence, there is a tax saving incentive to retain cash in the firm. We theoretically and empirically show that this tax saving motive is important for corporate cash...

Prior research finds that firms pay special dividends before a dividend tax increase. We examine the real effects of this decision, finding that firms incur costs to pay these tax-motivated special dividends. Specifically, firms reduce investment and repurchases to pay these dividends. Further,...

We test two hypotheses about the determinants of closed-end fund premia and discounts using a comprehensive sample of non-taxable and taxable funds for the period 1988 to 2002. We test whether fund premia reflect agency costs, and the potential tax liability associated with unrealized capital...

Using the 2003 reduction in dividend tax rates to identify an exogenous change in the after-tax value of dividends to shareholders, we test whether stock holdings among company executives is an important determinant of payout policy. We have three primary findings. First, we find that when top...

This paper investigates whether corporate payout policy is associated with insiders' share holdings and their tax preferences. We find that insider ownership and the implied tax liabilities are positively related to firms' propensity to employ share repurchases. Firms with higher levels of or...

Contrary to Miller and Modigliani (1961), payout policy is not irrelevant and investment policy is not the sole determinant of value, even in frictionless markets. MM ask quot;Do companies with generous distribution policies consistently sell at a premium above those with niggardly payouts?quot;...

We examine ex-dividend day behavior on the Copenhagen Stock Exchange. We report price drop ratios of 25%, well below the 70-80% from U.S. data. The tax clientele hypothesis predicts ratios between 57% and 126% based on the Danish tax structure. Our results conflict with tax and tick size models,...

There is a long-standing debate as to whether changes in shareholder-level taxes have an effect on firm dividend policy. The traditional view is that tax changes influence dividends, while the new view is that there generally is no such effect. In support of the traditional view, recent...

We study stock holdings and trading behavior of more than 60,000 households and find evidence consistent with dividend clienteles. Retail investor stock holdings indicate a preference for dividend yield that increases with age and decreases with income, consistent with age and tax clienteles,...