Dividends, Capital Gains, and the Corporate Veil: Evidence from Britain, Canada, and the United States / James M. Poterba.

Format:

Book

Author/Creator:

Poterba, James M.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w2975.

NBER working paper series no. w2975

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Dividends, Capital Gains, and the Corporate Veil

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1989.

Summary:

This paper investigates the effects of increased cash dividend payout, and of "forced realizations~ of capital gains in corporate control transactions, on the level of aggregate consumption. The results support the proposition that investors respond differently to cash receipts from firms and to accruing capital gains. Consistent but weak evidence for the United States, Great Britain, and Canada suggests that higher dividend tax rates lower consumption. This is consistent with such tax rates increasing corporate saving, while households fail to completely pierce the corporate veil and therefore reduce their consumption. Time series evidence from the U.S. and the U.K. also suggests that "forced realizations" of capital gains in takeovers may spur consumption, indicating a relatively unexplored link between corporate financial decisions and aggregate consumption.

Notes:

Print version record

May 1989.