Dividend Taxes and Investor Behavior: Evidence from the 2003 Dividend Tax Cut

2012 ◽  
Author(s):  
Elizabeth Chorvat
Keyword(s):  
Investor Behavior ◽  
Dividend Tax ◽  
Dividend Taxes

Foreign Portfolio Investment and Shareholder Dividend Taxes

2015 ◽  
Vol 91 (3) ◽  
pp. 717-740 ◽  
Author(s):  
Dan Amiram ◽  
Mary Margaret Frank
Keyword(s):  
Empirical Support ◽  
Weighted Average ◽  
Risky Assets ◽  
Foreign Portfolio Investment ◽  
Tax Rate ◽  
Portfolio Holdings ◽  
International Setting ◽  
National Tax ◽  
Dividend Tax ◽  
Dividend Taxes

ABSTRACT We investigate the effects of dividend taxes on foreign equity portfolio holdings. Based on the extension of an equilibrium model with risky assets to an international setting, we predict that a change in the tax rate on dividends of a country's domestic investors is positively related to changes in foreign investors' portfolio holdings in that country. The evidence from two research settings, which exploit changes in the national tax policies of different countries, supports this prediction. More generally, the model predicts that a foreign investor's equilibrium portfolio holdings in a country are negatively related to the dividend tax rate that she directly pays on assets in that country and positively related to the weighted-average dividend tax rate of worldwide investors in that country. Results from analyses using panel data provide empirical support for these predictions.

scholarly journals Individual Investors’ Dividend Taxes and Corporate Payout Policies

2017 ◽  
Vol 52 (3) ◽  
pp. 963-990 ◽  
Author(s):  
Oliver Zhen Li ◽  
Hang Liu ◽  
Chenkai Ni ◽  
Kangtao Ye
Keyword(s):  
Tax Reform ◽  
Tax Law ◽  
Individual Investors ◽  
Tax Rates ◽  
Minority Shareholders ◽  
Dividend Payout ◽  
Controlling Shareholders ◽  
Trading Activities ◽  
Dividend Tax ◽  
Dividend Taxes

The 2012 Dividend Tax Reform in China ties individual investors’ dividend tax rates to the length of their shareholding period. We find that firms facing a reduction (increase) in their individual investors’ dividend tax rates are more (less) likely to increase dividend payout. Such an effect is concentrated in firms where incentives of controlling shareholders and minority shareholders are aligned. Furthermore, investors respond to this tax law change by reducing trading activities before the cum-dividend day and successfully lower their dividend tax penalty. Overall, our evidence enhances the notion that individual investors’ tax profiles shape firms’ payout policies.

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