Dividends, Capital Gains And The Corporate Veil: Evidence From Britain, Canada And The United States
AbstractThis paper investigates the effects of increased cash dividend payout, and of "forced realizations~ of capital gains in corporate control transactions, on the level of aggregate consumption. The results support the proposition that investors respond differently to cash receipts from firms and to accruing capital gains. Consistent but weak evidence for the United States, Great Britain, and Canada suggests that higher dividend tax rates lower consumption. This is consistent with such tax rates increasing corporate saving, while households fail to completely pierce the corporate veil and therefore reduce their consumption. Time series evidence from the U.S. and the U.K. also suggests that "forced realizations" of capital gains in takeovers may spur consumption, indicating a relatively unexplored link between corporate financial decisions and aggregate consumption.
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Bibliographic InfoPaper provided by John Deutsch Institute for the Study of Economic Policy in its series Working Papers with number 3.
Length: 25 pages
Date of creation: 1989
Date of revision:
Contact details of provider:
Postal: Dunning Hall, Queen's University, Kingston, Ontario, K7L 3N6
Web page: http://jdi-legacy.econ.queensu.ca/
More information through EDIRC
consumption ; investments ; savings ; household;
Other versions of this item:
- James M. Poterba, 1991. "Dividends, Capital Gains, and the Corporate Veil: Evidence from Britain, Canada, and the United States," NBER Chapters, in: National Saving and Economic Performance, pages 49-74 National Bureau of Economic Research, Inc.
- James M. Poterba, 1989. "Dividends, Capital Gains, and the Corporate Veil: Evidence from Britain, Canada, and the United States," NBER Working Papers 2975, National Bureau of Economic Research, Inc.
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