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Twenty-five Years of Tax Law Changes and Investor Response


  • Skinner, David Lynn


Ex-dividend day research detects dividend-clientele effects that the tax-clientele hypothesis attributes to peronal taxation. In this study I examine all ten personal tax changes between 1963 and 1988 and find little support for the tax-clientele hypothesis. Few tax changes are accompanied by significant changes in the ex-day ratio, and more than half are opposite the direction predicted. In particular, the largest tax changes, in 1982 and 1987, fail to support the tax-clientele hypothesis. The results are consistent with some unknown, non-tax-induced clientele effect(s).

Suggested Citation

  • Skinner, David Lynn, 1993. "Twenty-five Years of Tax Law Changes and Investor Response," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 16(1), pages 61-70, Spring.
  • Handle: RePEc:bla:jfnres:v:16:y:1993:i:1:p:61-70

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    References listed on IDEAS

    1. Aggarwal, Raj & Rao, Ramesh P, 1990. "Institutional Ownership and Distribution of Equity Returns," The Financial Review, Eastern Finance Association, vol. 25(2), pages 211-229, May.
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    8. Scott, Robert C & Horvath, Philip A, 1980. " On the Direction of Preference for Moments of Higher Order Than the Variance," Journal of Finance, American Finance Association, vol. 35(4), pages 915-919, September.
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    Cited by:

    1. Sven-Olov Daunfeldt & Carina Selander & Magnus Wikstrom, 2009. "Taxation, Dividend Payments and Ex-Day Price-Changes," Multinational Finance Journal, Multinational Finance Journal, vol. 13(1-2), pages 135-154, March-Jun.
    2. Jeff Whitworth & Yi Zhang, 2010. "Accrued capital gains and ex-dividend day pricing," Managerial Finance, Emerald Group Publishing, vol. 36(8), pages 680-702, July.
    3. Sven-Olov Daunfeldt, 2007. "Tax-Induced Trading and the Identity of the Marginal Investor: Evidence from Sweden," The European Journal of Finance, Taylor & Francis Journals, vol. 13(7), pages 657-667.
    4. Casey, K. Michael & Dickens, Ross N., 2000. "The effects of tax and regulatory changes on commercial bank dividend policy," The Quarterly Review of Economics and Finance, Elsevier, vol. 40(2), pages 279-293.

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