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Did the 2003 Tax Act reduce the cost of equity capital?

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  • Dhaliwal, Dan
  • Krull, Linda
  • Li, Oliver Zhen

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  • Dhaliwal, Dan & Krull, Linda & Li, Oliver Zhen, 2007. "Did the 2003 Tax Act reduce the cost of equity capital?," Journal of Accounting and Economics, Elsevier, vol. 43(1), pages 121-150, March.
  • Handle: RePEc:eee:jaecon:v:43:y:2007:i:1:p:121-150
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    References listed on IDEAS

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    1. Eugene F. Fama & Kenneth R. French, 2001. "Disappearing Dividends: Changing Firm Characteristics Or Lower Propensity To Pay?," Journal of Applied Corporate Finance, Morgan Stanley, vol. 14(1), pages 67-79.
    2. Chen, Nai-Fu & Grundy, Bruce & Stambaugh, Robert F, 1990. "Changing Risk, Changing Risk Premiums, and Dividend Yield Effects," The Journal of Business, University of Chicago Press, vol. 63(1), pages 51-70, January.
    3. Raj Chetty & Emmanuel Saez, 2005. "Dividend Taxes and Corporate Behavior: Evidence from the 2003 Dividend Tax Cut," The Quarterly Journal of Economics, Oxford University Press, vol. 120(3), pages 791-833.
    4. Black, Fischer & Scholes, Myron, 1974. "The effects of dividend yield and dividend policy on common stock prices and returns," Journal of Financial Economics, Elsevier, vol. 1(1), pages 1-22, May.
    5. Graham, John R., 1999. "Do personal taxes affect corporate financing decisions?," Journal of Public Economics, Elsevier, vol. 73(2), pages 147-185, August.
    6. Blume, Marshall E, 1980. "Stock Returns and Dividend Yields: Some More Evidence," The Review of Economics and Statistics, MIT Press, vol. 62(4), pages 567-577, November.
    7. Fama, Eugene F. & French, Kenneth R., 1997. "Industry costs of equity," Journal of Financial Economics, Elsevier, vol. 43(2), pages 153-193, February.
    8. Sias, Richard W. & Starks, Laura T., 1997. "Return autocorrelation and institutional investors," Journal of Financial Economics, Elsevier, vol. 46(1), pages 103-131, October.
    9. Miller, Merton H, 1977. "Debt and Taxes," Journal of Finance, American Finance Association, vol. 32(2), pages 261-275, May.
    10. Yaniv Grinstein & Roni Michaely, 2005. "Institutional Holdings and Payout Policy," Journal of Finance, American Finance Association, vol. 60(3), pages 1389-1426, June.
    11. Amihud, Yakov & Li, Kefei, 2006. "The Declining Information Content of Dividend Announcements and the Effects of Institutional Holdings," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 41(03), pages 637-660, September.
    12. Litzenberger, Robert H & Ramaswamy, Krishna, 1982. " The Effects of Dividends on Common Stock Prices: Tax Effects or Information Effects?," Journal of Finance, American Finance Association, vol. 37(2), pages 429-443, May.
    13. Lang, Mark H. & Shackelford, Douglas A., 2000. "Capitalization of capital gains taxes: evidence from stock price reactions to the 1997 rate reduction," Journal of Public Economics, Elsevier, vol. 76(1), pages 69-85, April.
    14. 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.
    15. Fama, Eugene F & French, Kenneth R, 1996. " Multifactor Explanations of Asset Pricing Anomalies," Journal of Finance, American Finance Association, vol. 51(1), pages 55-84, March.
    16. Jennifer L. Blouin & Jana Smith Raedy & Douglas A. Shackelford, 2003. "Capital Gains Taxes and Equity Trading: Empirical Evidence," Journal of Accounting Research, Wiley Blackwell, vol. 41(4), pages 611-651, September.
    17. Merton H. Miller & Franco Modigliani, 1961. "Dividend Policy, Growth, and the Valuation of Shares," The Journal of Business, University of Chicago Press, vol. 34, pages 411-411.
    18. Miller, Merton H & Scholes, Myron S, 1982. "Dividends and Taxes: Some Empirical Evidence," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1118-1141, December.
    19. Dhaliwal, Dan & Zhen Li, Oliver & Trezevant, Robert, 2003. "Is a dividend tax penalty incorporated into the return on a firm's common stock?," Journal of Accounting and Economics, Elsevier, vol. 35(2), pages 155-178, June.
    20. DeAngelo, Harry & DeAngelo, Linda & Skinner, Douglas J., 2004. "Are dividends disappearing? Dividend concentration and the consolidation of earnings," Journal of Financial Economics, Elsevier, vol. 72(3), pages 425-456, June.
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    Citations

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    Cited by:

    1. Edwards, Alexander & Shevlin, Terry, 2011. "The value of a flow-through entity in an integrated corporate tax system," Journal of Financial Economics, Elsevier, vol. 101(2), pages 473-491, August.
    2. Norio Kitagawa & Hyonok Kim & Masatoshi Goto, 2011. "The effect of non-financial risk information on the evaluation of implied cost of capitals," Discussion Papers 2011-07, Kobe University, Graduate School of Business Administration, revised Feb 2011.
    3. Hanlon, Michelle & Heitzman, Shane, 2010. "A review of tax research," Journal of Accounting and Economics, Elsevier, vol. 50(2-3), pages 127-178, December.
    4. Curtis Nicholls, 2016. "The impact of SEC investigations and accounting and auditing enforcement releases on firms’ cost of equity capital," Review of Quantitative Finance and Accounting, Springer, vol. 47(1), pages 57-82, July.
    5. repec:eee:pubeco:v:151:y:2017:i:c:p:56-73 is not listed on IDEAS
    6. Norio Kitagawa & Masatoshi Gotoh, 2011. "Implied Cost of Capital over the Last 20 Years," The Japanese Accounting Review, Research Institute for Economics & Business Administration, Kobe University, vol. 1, pages 71-104, December.
    7. Echterling, F. & Eierle, B. & Ketterer, S., 2015. "A review of the literature on methods of computing the implied cost of capital," International Review of Financial Analysis, Elsevier, vol. 42(C), pages 235-252.
    8. Lin, Leming & Flannery, Mark J., 2013. "Do personal taxes affect capital structure? Evidence from the 2003 tax cut," Journal of Financial Economics, Elsevier, vol. 109(2), pages 549-565.
    9. Chongyang Chen & Zhonglan Dai & Douglas Shackelford & Harold Zhang, 2011. "Does Financial Constraint Affect Shareholder Taxes and the Cost of Equity Capital?," NBER Working Papers 17169, National Bureau of Economic Research, Inc.

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