Which Types of Firms React More to a Tax Cut? Evidence from the 2003 Dividend Tax Cut

Tat-kei Lai, Travis Ng

Publikation: KonferencebidragPaperForskningpeer review

Resumé

The agency model of Chetty and Saez (2010) predicts that firms with stronger corporate governance are more responsive to a dividend tax cut in their dividend and investment policies. We test these predictions by exploiting the sudden and significant dividend tax cut following the Jobs and Growth Tax Relief Reconciliation Act of 2003 and the pre-tax cut variation in corporate
governance standards across firms. We find that firms with stronger corporate governance raise dividends and reduce investment in response to the tax cut significantly more than firms with weaker corporate governance. These differential reactions come from differences in corporate governance standards but not differences in ownership concentration ratios.
OriginalsprogEngelsk
Publikationsdato2012
Antal sider37
StatusUdgivet - 2012
BegivenhedThe 24th Annual Conference of the Northern Finance Association. NFA 2012 - Niagara Falls, Ontario, Canada
Varighed: 28 okt. 201230 okt. 2012
Konferencens nummer: 24
http://northernfinance2012.org

Konference

KonferenceThe 24th Annual Conference of the Northern Finance Association. NFA 2012
Nummer24
LandCanada
ByNiagara Falls, Ontario
Periode28/10/201230/10/2012
Internetadresse

Emneord

  • Dividend Taxation
  • Corporate Governance
  • Dividend Payment
  • Investment

Citer dette

Lai, T., & Ng, T. (2012). Which Types of Firms React More to a Tax Cut? Evidence from the 2003 Dividend Tax Cut. Afhandling præsenteret på The 24th Annual Conference of the Northern Finance Association. NFA 2012, Niagara Falls, Ontario, Canada.
Lai, Tat-kei ; Ng, Travis . / Which Types of Firms React More to a Tax Cut? Evidence from the 2003 Dividend Tax Cut. Afhandling præsenteret på The 24th Annual Conference of the Northern Finance Association. NFA 2012, Niagara Falls, Ontario, Canada.37 s.
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abstract = "The agency model of Chetty and Saez (2010) predicts that firms with stronger corporate governance are more responsive to a dividend tax cut in their dividend and investment policies. We test these predictions by exploiting the sudden and significant dividend tax cut following the Jobs and Growth Tax Relief Reconciliation Act of 2003 and the pre-tax cut variation in corporategovernance standards across firms. We find that firms with stronger corporate governance raise dividends and reduce investment in response to the tax cut significantly more than firms with weaker corporate governance. These differential reactions come from differences in corporate governance standards but not differences in ownership concentration ratios.",
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Lai, T & Ng, T 2012, 'Which Types of Firms React More to a Tax Cut? Evidence from the 2003 Dividend Tax Cut' Paper fremlagt ved The 24th Annual Conference of the Northern Finance Association. NFA 2012, Niagara Falls, Ontario, Canada, 28/10/2012 - 30/10/2012, .

Which Types of Firms React More to a Tax Cut? Evidence from the 2003 Dividend Tax Cut. / Lai, Tat-kei; Ng, Travis .

2012. Afhandling præsenteret på The 24th Annual Conference of the Northern Finance Association. NFA 2012, Niagara Falls, Ontario, Canada.

Publikation: KonferencebidragPaperForskningpeer review

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AB - The agency model of Chetty and Saez (2010) predicts that firms with stronger corporate governance are more responsive to a dividend tax cut in their dividend and investment policies. We test these predictions by exploiting the sudden and significant dividend tax cut following the Jobs and Growth Tax Relief Reconciliation Act of 2003 and the pre-tax cut variation in corporategovernance standards across firms. We find that firms with stronger corporate governance raise dividends and reduce investment in response to the tax cut significantly more than firms with weaker corporate governance. These differential reactions come from differences in corporate governance standards but not differences in ownership concentration ratios.

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Lai T, Ng T. Which Types of Firms React More to a Tax Cut? Evidence from the 2003 Dividend Tax Cut. 2012. Afhandling præsenteret på The 24th Annual Conference of the Northern Finance Association. NFA 2012, Niagara Falls, Ontario, Canada.