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 sider38
DOI
StatusUdgivet - 2012
BegivenhedThe 10th International Paris December Finance Meeting - Paris, Frankrig
Varighed: 20 dec. 201220 dec. 2012
Konferencens nummer: 10
https://www.eurofidai.org/en/december_2012.html

Konference

KonferenceThe 10th International Paris December Finance Meeting
Nummer10
LandFrankrig
ByParis
Periode20/12/201220/12/2012
Internetadresse

Emneord

  • Dividend Taxation
  • Corporate Governance
  • Dividends
  • 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 10th International Paris December Finance Meeting, Paris, Frankrig. https://doi.org/10.2139/ssrn.2081946
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 10th International Paris December Finance Meeting, Paris, Frankrig.38 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 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.",
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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 10th International Paris December Finance Meeting, Paris, Frankrig, 20/12/2012 - 20/12/2012, . https://doi.org/10.2139/ssrn.2081946

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 10th International Paris December Finance Meeting, Paris, Frankrig.

Publikation: KonferencebidragPaperForskningpeer review

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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 10th International Paris December Finance Meeting, Paris, Frankrig. https://doi.org/10.2139/ssrn.2081946