Taxation, Dividends and Share Repurchases: Taking Evidence Global

Forthcoming in: Journal of Financial and Quantitative Analysis (JFQA)

36 Pages Posted: 7 Jan 2010 Last revised: 3 Apr 2013

See all articles by Marcus Jacob

Marcus Jacob

WHU - Otto Beisheim School of Management

Martin Jacob

University of Navarra, IESE Business School

Date Written: March 1, 2012

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.

Keywords: Taxation, Dividends, Share Repurchases, Payout Policy

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JEL Classification: G10, G15, G30, G35, H24, H25

Suggested Citation

Jacob, Marcus and Jacob, Martin, Taxation, Dividends and Share Repurchases: Taking Evidence Global (March 1, 2012). Forthcoming in: Journal of Financial and Quantitative Analysis (JFQA), Available at SSRN: https://ssrn.com/abstract=1532674 or http://dx.doi.org/10.2139/ssrn.1532674

Marcus Jacob

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

Martin Jacob (Contact Author)

University of Navarra, IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

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