The Share Price Effects of Dividend Taxes and Tax Imputation Credits / Trevor S. Harris, R. Glenn Hubbard, Deen Kemsley.

Format:

Book

Author/Creator:

Harris, Trevor S.

Contributor:

National Bureau of Economic Research.

Hubbard, R. Glenn.

Kemsley, Deen.

Series:

Working Paper Series (National Bureau of Economic Research) no. w7445.

NBER working paper series no. w7445

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1999.

Summary:

We examine the hypothesis that dividend taxes are capitalized into share prices by focusing on investors' implicit valuations of retained earnings versus paid-in equity. Retained earnings are distributable as taxable dividends, whereas paid-in equity is distributable as a tax-free return of capital. Consistent with dividend tax capitalization, firm-level results for the United States indicate that accumulated retained earnings are valued less per unit than contributed capital. In addition, differences in dividend tax rates across U.S. tax regimes are associated with predictable differences in the magnitude of the implied tax discount for retained earnings, as are differences in dividend tax rates across Australia, Japan, France, Germany, and the United Kingdom.

Notes:

Print version record

December 1999.