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Taxes and dividend clientele: Evidence from trading and ownership structure

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  • Lee, Yi-Tsung
  • Liu, Yu-Jane
  • Roll, Richard
  • Subrahmanyam, Avanidhar

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  • Lee, Yi-Tsung & Liu, Yu-Jane & Roll, Richard & Subrahmanyam, Avanidhar, 2006. "Taxes and dividend clientele: Evidence from trading and ownership structure," Journal of Banking & Finance, Elsevier, vol. 30(1), pages 229-246, January.
  • Handle: RePEc:eee:jbfina:v:30:y:2006:i:1:p:229-246
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    References listed on IDEAS

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    1. Boyd, John H & Jagannathan, Ravi, 1994. "Ex-dividend Price Behavior of Common Stocks," Review of Financial Studies, Society for Financial Studies, vol. 7(4), pages 711-741.
    2. 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.
    3. Elton, Edwin J & Gruber, Martin J, 1970. "Marginal Stockholder Tax Rates and the Clientele Effect," The Review of Economics and Statistics, MIT Press, vol. 52(1), pages 68-74, February.
    4. McDonald, Robert L, 2001. "Cross-Border Investing with Tax Arbitrage: The Case of German Dividend Tax Credits," Review of Financial Studies, Society for Financial Studies, vol. 14(3), pages 617-657.
    5. Leonie Bell & Tim Jenkinson, 2002. "New Evidence of the Impact of Dividend Taxation and on the Identity of the Marginal Investor," Journal of Finance, American Finance Association, vol. 57(3), pages 1321-1346, June.
    6. Michaely, Roni & Vila, Jean-Luc, 1995. "Investors' Heterogeneity, Prices, and Volume around the Ex-Dividend Day," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 30(02), pages 171-198, June.
    7. William M. Getry & Deen Kemsley & Christopher J. Mayer, 2003. "Dividend Taxes and Share Prices: Evidence from Real Estate Investment Trusts," Journal of Finance, American Finance Association, vol. 58(1), pages 261-282, February.
    8. 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.
    9. Bolster, Paul J. & Janjigian, Vahan, 1991. "Dividend Policy and Valuation Effects of the Tax Reform Act of 1986," National Tax Journal, National Tax Association, vol. 44(4), pages 511-18, December.
    10. Casey, K Mike, et al, 1999. "Examining the Impact of the 1986 Tax Reform Act on Corporate Dividend Policy: A New Methodology," The Financial Review, Eastern Finance Association, vol. 34(3), pages 33-46, August.
    11. Eugene F. Fama, 2002. "Testing Trade-Off and Pecking Order Predictions About Dividends and Debt," Review of Financial Studies, Society for Financial Studies, vol. 15(1), pages 1-33, March.
    12. Frank, Murray & Jagannathan, Ravi, 1998. "Why do stock prices drop by less than the value of the dividend? Evidence from a country without taxes," Journal of Financial Economics, Elsevier, vol. 47(2), pages 161-188, February.
    13. Jagannathan, Murali & Stephens, Clifford P. & Weisbach, Michael S., 2000. "Financial flexibility and the choice between dividends and stock repurchases," Journal of Financial Economics, Elsevier, vol. 57(3), pages 355-384, September.
    14. Dhaliwal, Dan S. & Erickson, Merle & Trezevant, Robert, 1999. "A Test of the Theory of Tax Clienteles for Dividend Policies," National Tax Journal, National Tax Association, vol. 52(n. 2), pages 179-94, June.
    15. Clifford P. Stephens & Michael S. Weisbach, 1998. "Actual Share Reacquisitions in Open-Market Repurchase Programs," Journal of Finance, American Finance Association, vol. 53(1), pages 313-333, February.
    16. Fung, W.K.H., 1981. "Taxes, clientele effect of dividend and risk, return linearity," Journal of Banking & Finance, Elsevier, vol. 5(3), pages 405-424, September.
    17. Grammatikos, Theoharry, 1989. "Dividend Stripping, Risk Exposure, and the Effect of the 1984 Tax Reform Act on the Ex-dividend Day Behavior," The Journal of Business, University of Chicago Press, vol. 62(2), pages 157-173, April.
    18. Bali, Rakesh & Hite, Gailen L., 1998. "Ex dividend day stock price behavior: discreteness or tax-induced clienteles?," Journal of Financial Economics, Elsevier, vol. 47(2), pages 127-159, February.
    19. Joan Farre-Mensa & Roni Michaely & Martin Schmalz, 2014. "Payout Policy," Annual Review of Financial Economics, Annual Reviews, vol. 6(1), pages 75-134, December.
      • Allen, Franklin & Michaely, Roni, 2003. "Payout policy," Handbook of the Economics of Finance,in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, edition 1, volume 1, chapter 7, pages 337-429 Elsevier.
    20. Brav, Alon & Graham, John R. & Harvey, Campbell R. & Michaely, Roni, 2005. "Payout policy in the 21st century," Journal of Financial Economics, Elsevier, vol. 77(3), pages 483-527, September.
    21. Elton, Edwin & Gruber, Martin & Rentzler, Joel, 1983. "A simple examination of the empirical relationship between dividend yields and deviations from the CAPM," Journal of Banking & Finance, Elsevier, vol. 7(1), pages 135-146, March.
    22. John R. Graham & Roni Michaely & Michael R. Roberts, 2003. "Do Price Discreteness and Transactions Costs Affect Stock Returns? Comparing Ex-Dividend Pricing before and after Decimalization," Journal of Finance, American Finance Association, vol. 58(6), pages 2611-2636, December.
    23. Vermaelen, Theo, 1981. "Common stock repurchases and market signalling : An empirical study," Journal of Financial Economics, Elsevier, vol. 9(2), pages 139-183, June.
    24. Dempsey, Mike, 2001. "Investor tax rationality and the relationship between dividend yields and equity returns: An explanatory note," Journal of Banking & Finance, Elsevier, vol. 25(9), pages 1681-1686, September.
    25. Scholz, John Karl, 1992. "A direct examination of the dividend clientele hypothesis," Journal of Public Economics, Elsevier, vol. 49(3), pages 261-285, December.
    26. Franklin Allen & Antonio E. Bernardo & Ivo Welch, 2000. "A Theory of Dividends Based on Tax Clienteles," Journal of Finance, American Finance Association, vol. 55(6), pages 2499-2536, December.
    27. George J. Papaioannou & Craig M. Savarese, 1994. "Corporate Dividend Policy Response to the Tax Reform Act of 1986," Financial Management, Financial Management Association, vol. 23(1), Spring.
    28. Kent Daniel & David Hirshleifer & Avanidhar Subrahmanyam, 1998. "Investor Psychology and Security Market Under- and Overreactions," Journal of Finance, American Finance Association, vol. 53(6), pages 1839-1885, December.
    29. 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.
    30. Denis, David J. & Denis, Diane K. & Sarin, Atulya, 1994. "The Information Content of Dividend Changes: Cash Flow Signaling, Overinvestment, and Dividend Clienteles," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 29(04), pages 567-587, December.
    31. Andy Naranjo & M. Nimalendran & Mike Ryngaert, 1998. "Stock Returns, Dividend Yields, and Taxes," Journal of Finance, American Finance Association, vol. 53(6), pages 2029-2057, December.
    32. Bolster, Paul J. & Janjigian, Vahan, 1991. "Dividend Policy and Valuation Effects of the Tax Reform Act of 1986," National Tax Journal, National Tax Association;National Tax Journal, vol. 44(4), pages 511-518, December.
    33. Lewellen, Wilbur G, et al, 1978. "Some Direct Evidence on the Dividend Clientele Phenomenon," Journal of Finance, American Finance Association, vol. 33(5), pages 1385-1399, December.
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    35. Mazhar Siddiqi, 1997. "Using ex-day returns to separate the tax and information effects of dividend changes," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 21(2), pages 83-92, June.
    36. repec:bla:joares:v:37:y:1999:i:2:p:275-291 is not listed on IDEAS
    37. Dhaliwal, Dan S. & Erickson, Merle & Trezevant, Robert, 1999. "A Test of the Theory of Tax Clienteles for Dividend Policies," National Tax Journal, National Tax Association;National Tax Journal, vol. 52(2), pages 179-194, June.
    38. Briston, R J & Tomkins, C R, 1970. "The Impact of the Introduction of Corporation Tax upon the Dividend Policies of United Kingdom Companies," Economic Journal, Royal Economic Society, vol. 80(319), pages 617-637, September.
    39. Barclay, Michael J., 1987. "Dividends, taxes, and common stock prices : The ex-dividend day behavior of common stock prices before the income tax," Journal of Financial Economics, Elsevier, vol. 19(1), pages 31-44, September.
    40. Litzenberger, Robert H. & Ramaswamy, Krishna, 1979. "The effect of personal taxes and dividends on capital asset prices : Theory and empirical evidence," Journal of Financial Economics, Elsevier, vol. 7(2), pages 163-195, June.
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    Cited by:

    1. Lee, Cheng-Few & Kuo, Nan-Ting, 2014. "Effects of ultimate ownership structure and corporate tax on capital structures: Evidence from Taiwan," International Review of Economics & Finance, Elsevier, vol. 29(C), pages 409-425.
    2. Jacob, Martin, 2008. "Welche privaten Veräußerungsgewinne sollten besteuert werden?," arqus Discussion Papers in Quantitative Tax Research 49, arqus - Arbeitskreis Quantitative Steuerlehre.
    3. Kuo, Nan-Ting & Lee, Cheng-Few, 2013. "Effects of dividend tax and signaling on firm valuation: Evidence from taxable stock dividend announcements," Pacific-Basin Finance Journal, Elsevier, vol. 25(C), pages 157-180.
    4. Jacob, Martin, 2010. "Taxation, Dividends, and Share Repurchases: Taking Evidence Global," Working Paper Series, Center for Fiscal Studies 2010:10, Uppsala University, Department of Economics.
    5. Podlech, Nils, 2012. "Dividenden und Aktienrückkäufe unter der Abgeltungssteuer," Manuskripte aus den Instituten für Betriebswirtschaftslehre der Universität Kiel 656, Christian-Albrechts-Universität zu Kiel, Institut für Betriebswirtschaftslehre.
    6. Ming-Cheng Wu & ErinH.C. Kao & Hung-Gay Fung, 2008. "Impact Of Dividend-Protected Employee Stock Options On Payout Policies: Evidence From Taiwan," Pacific Economic Review, Wiley Blackwell, vol. 13(4), pages 431-452, October.
    7. Chen, Hung-Ling & Chow, Edward H. & Shiu, Cheng-Yi, 2013. "Ex-dividend prices and investor trades: Evidence from Taiwan," Pacific-Basin Finance Journal, Elsevier, vol. 24(C), pages 39-65.
    8. Henry, Darren, 2011. "Ownership structure and tax-friendly dividends," Journal of Banking & Finance, Elsevier, vol. 35(10), pages 2747-2760, October.
    9. Podlech, Nils, 2012. "Dividenden und Aktienrückkäufe unter der Abgeltungssteuer," EconStor Preprints 75273, ZBW - German National Library of Economics.
    10. Ji, Philip Inyeob, 2016. "Is corporate payout taxation a long run phenomenon? Evidence from international data," The North American Journal of Economics and Finance, Elsevier, vol. 36(C), pages 84-100.

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