What if dividends were tax-exempt ? : evidence from a natural experiment

Isakov, Dušan (University of Fribourg, Switzerland) ; Pérignon, Christophe (HEC Paris, France) ; Weisskopf, Jean-Philippe (Ecole hôtelière de Lausanne, HES-SO // University of Applied Sciences Western Switzerland)

We study the effect of dividend taxes on the payout and investment policies of publicly listed firms. We exploit a unique setting in Switzerland where, following the corporate tax reform of 2011, some but not all firms were suddenly able to pay tax-exempt dividends. We show that treated firms increase their dividend payout by around 30% after the tax cut. The impact on payout is less pronounced for firms prone to agency conflicts. We find a significant positive abnormal stock return after the announcement of the payment of a tax-exempt dividend. However, reducing dividend taxes does not boost investment.


Keywords:
Article Type:
scientifique
Faculty:
Economie et Services
School:
EHL
Institute:
Aucun institut
Subject(s):
Economie/gestion
Date:
2021-01
Pagination:
40 p.
Published in:
The review of financial studies
Numeration (vol. no.):
To be published
DOI:
ISSN:
0893-9454
Appears in Collection:

Note: The file is under embargo until: 2023-01-01


 Record created 2021-06-11, last modified 2021-06-21

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