Executive Financial Incentives and Payout Policy: Firm Responses to the 2003 Dividend Tax Cut / Jeffrey R. Brown, Nellie Liang, Scott Weisbenner.

Format:

Book

Author/Creator:

Brown, Jeffrey R.

Contributor:

National Bureau of Economic Research.

Liang, Nellie.

Weisbenner, Scott.

Series:

Working Paper Series (National Bureau of Economic Research) no. w11002.

NBER working paper series no. w11002

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Executive Financial Incentives and Payout Policy

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2004.

Summary:

We test whether executive stock ownership affects firm payouts using the 2003 dividend tax cut to identify an exogenous change in the after-tax value of dividends. We find that executives with higher stock ownership were more likely to increase dividends after the tax cut in 2003, whereas no relation is found in previous periods when the dividend tax rate was higher. Relative to previous years, firms that initiated dividends in 2003 were more likely to reduce repurchases. The stock price reaction to the tax cut suggests that the substitution of dividends for repurchases may have been anticipated, consistent with agency conflicts.

Notes:

Print version record

December 2004.