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Taxation, Dividends, and Share Repurchases: Taking Evidence Global

Published online by Cambridge University Press:  07 October 2013

Marcus Jacob  and
Martin Jacob
Marcus Jacob
Affiliation:
marcus.jacob@whu.edu, WHU – Otto Beisheim School of Management, Burgplatz 2, Vallendar 56179, Germany.
Martin Jacob
Affiliation:
martin.jacob@whu.edu, WHU – Otto Beisheim School of Management, Burgplatz 2, Vallendar 56179, Germany.
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Abstract

We compile a comprehensive international dividend and capital gains tax data set to study tax-based explanations of corporate payout for a panel of 6,035 firms from 25 countries for the period 1990–2008. We find robust evidence that the tax penalty on dividends versus capital gains corresponds closely with firms’ propensity to pay dividends and repurchase shares, and with the amount of dividends and shares repurchased. Our coefficient estimates suggest a smaller tax effect than reported in recent single-country, single-event studies. Instead, our results correspond more closely with historic long-term estimates of the elasticity of dividends.

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Type
Research Articles
Information
Journal of Financial and Quantitative Analysis , Volume 48 , Issue 4 , August 2013 , pp. 1241 - 1269
Copyright
Copyright © Michael G. Foster School of Business, University of Washington 2013 

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