Harris and Kemsley (1999) suggest that shareholder-level dividend taxes on retained earnings are fully impounded into stock prices at the top statutory rate. Harris and Kemsley base their empirical tests on Ohlson (1995) with the addition of dividend taxes. We analyze Harris and Kemsley's...

The concept of residual income has become popular in recent years due, in part, to the Ohlson 1995 article on residual income valuation. Since Ohlson assumed clean surplus accounting in that article, the concept of residual income and clean surplus accounting have become intimately linked in the...

Exercise of stock options provides a source of operating cash flow because of the accounting treatment of reduced income tax payments. Tax savings from option exercises can generate a high percentage of a company's total operating cash flow, although this source of cash varies substantially...

Classical corporation tax entails double taxation of corporate income. The alternative practice to impute corporation tax to the domestic recipients of dividends is shown, in the case of a company with international owners, effectively to convert the imputation system back to a classical...

This paper investigates whether the tax disadvantage of dividends results in a relation between institutional portfolio allocations and dividend yield. I analyze the holdings of tax-exempt and taxable institutional investors. Controlling for size, performance, and risk, I find that taxable...

The European Union (EU) has no explicit common income tax law. Nevertheless, Court of Justice decisions have driven EU member states to adopt more similar corporate tax systems, and thus, to align the tax treatment of corporate profit distributions—dividends and capital gains.This paper...

We estimate a dynamic model, featuring agency conflicts and a stochastic tax reform arrival, to evaluate how the change from a worldwide to territorial tax system, enacted under the TCJA, affects foreign investment. Although a worldwide system imposes a higher tax liability on foreign income, we...

The introduction of the 2006 Norwegian shareholder income tax was announced in advance, and it increased top marginal tax rates on individual dividend income from zero to 28 percent. We document strong timing effects on dividend payout on a large panel of non-listed corporations, with a surge of...

This paper examines the response of private firms and their shareholders to a dividend tax increase, which affects only a small group of shareholders. Using an exogenous shock in Germany, my results suggest that firms do not adjust their payout policy but corporate minority shareholders, the...

Using proprietary data on the entire spectrum of ownership-structure and exact tax-status of investors and firms we examine how dividend taxation affects payout. Utilizing an exogenous shock to dividend taxation, we show that absent any frictions, dividend taxation has a large impact on payout....