Journal article
Dividend taxation and firm performance with heterogeneous payout responses
- Abstract:
- We analyze the performance of firms that were differentially affected by an unexpected tax on dividends before the Global Financial Crisis. We use exogenous policy variation for firms with different legal statuses and financial year-end dates to separately identify the policy announcement and implementation effects. We provide causal evidence for a sharp drop in dividends, but zero change in equipment purchases. Treated firms accumulate investment goods that are likely to be owner-manager’s personal assets instead of productive capital. At a time of severe liquidity shortage, some of the funds kept in the firm are used to pay back short-term debt.
- Publication status:
- Published
- Peer review status:
- Peer reviewed
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Access Document
- Files:
-
-
(Preview, Accepted manuscript, pdf, 2.7MB, Terms of use)
-
- Publisher copy:
- 10.1257/pol.20230109
Authors
- Publisher:
- American Economic Association
- Journal:
- American Economic Journal: Economic Policy More from this journal
- Volume:
- 17
- Issue:
- 2
- Pages:
- 1–29
- Publication date:
- 2025-04-29
- Acceptance date:
- 2024-06-20
- DOI:
- EISSN:
-
1945-774X
- ISSN:
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1945-7731
- Language:
-
English
- Keywords:
- Pubs id:
-
2009301
- Local pid:
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pubs:2009301
- Deposit date:
-
2024-06-21
- ARK identifier:
Terms of use
- Copyright date:
- 2025
- Notes:
- This is the accepted manuscript version of the article. The final version is available online from American Economic Association at: https://doi.org/10.1257/pol.20230109
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