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A Replication of “Dividend Taxes and Implied Cost of Equity Capital†(Journal of Accounting Research 2005)*

* This paper is a replication of an original study

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  • Mingjun Zhou

Abstract

Three major measures of implied cost of equity are sensitive to a summary measure on macroeconomic conditions (the Chicago Fed National Activity Index, or CF3) while changes in the tax rates on investors’ dividend income and capital gains do not appear to be insulated from changes in general business conditions. In the presence of CF3, the measure of dividend tax penalty used in the current empirical research does not seem to be specific to detect the effect of dividend tax capitalization on cost of equity. Future research may need to hold a more nuanced view on the empirical proxy of dividend tax penalty amid major shifts in business cycles.

Suggested Citation

  • Mingjun Zhou, 2015. "A Replication of “Dividend Taxes and Implied Cost of Equity Capital†(Journal of Accounting Research 2005)," Public Finance Review, , vol. 43(2), pages 235-255, March.
    • Handle: RePEc:sae:pubfin:v:43:y:2015:i:2:p:235-255
    DOI: 10.1177/1091142114537891
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    References listed on IDEAS

    as
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    Replication

    This item is a replication of:
  • Dan Dhaliwal & Linda Krull & Oliver Zhen Li & William Moser, 2005. "Dividend Taxes and Implied Cost of Equity Capital," Journal of Accounting Research, Wiley Blackwell, vol. 43(5), pages 675-708, December.

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