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Does Lowering Dividend Tax Rates IncreaseDividends Repatriated? Evidence of Intrafirm Cross-Border Dividend Repatriation Policiesby German Multinational Enterprises

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Author Info

  • Christian Bellak
  • Markus Leibrecht

Abstract

This paper explores the effect dividend taxes exert on dividends repatriated from foreign affiliates to their German parent companies. The empirical analysis based on firm-level data from the Microdatabase Direct Investment provided by the Deutsche Bundesbank first signals the validity of the original Lintner model for cross-border intrafirm dividend payments of German affiliates abroad. Second, results imply that high dividend taxes indeed have a statistically significant negative effect on dividends repatriated. Our calculations suggest that a one-percentage-point decrease in the dividend tax rate would increase dividends repatriated by about 3.75%. Evaluated at the mean of positive dividend payments, a semielasticity of -1.71 is derived.

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Bibliographic Info

Article provided by Mohr Siebeck, Tübingen in its journal FinanzArchiv.

Volume (Year): 66 (2010)
Issue (Month): 4 (December)
Pages: 350-383

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Handle: RePEc:mhr:finarc:urn:sici:0015-2218(201012)66:4_350:dldtri_2.0.tx_2-s

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Related research

Keywords: dividend policy; taxes; Lintner model; multinational enterprise;

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