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3 edition of 2003 dividend tax cuts and the value of the firm found in the catalog.

2003 dividend tax cuts and the value of the firm

Alan J. Auerbach

2003 dividend tax cuts and the value of the firm

an event study

by Alan J. Auerbach

  • 188 Want to read
  • 30 Currently reading

Published by National Bureau of Economic Research in Cambridge, Mass .
Written in English

    Subjects:
  • Dividends -- Taxation -- United States

  • Edition Notes

    StatementAlan J. Auerbach, Kevin A. Hassett.
    SeriesNBER working paper paper series -- no. 11449., Working paper series (National Bureau of Economic Research) -- working paper no. 11449.
    ContributionsHassett, Kevin A., National Bureau of Economic Research.
    The Physical Object
    Pagination33, [13] p. :
    Number of Pages33
    ID Numbers
    Open LibraryOL17626951M
    OCLC/WorldCa61156144

      How do dividend taxes affect stock volatility? If a risk-averse executive faces price risk through his incentive contract, changes in stock volatility due to dividend taxes may increase agency costs and therefore decrease overall welfare. In this paper, I use a decrease in dividend taxes as a natural experiment to identify their effect on the firm’s idiosyncratic stock return : Erin E. Syron Ferris. Consistent with the hypothesis that the tax preferences of institutions are the underlying force of the observed cross-sectional variations in firm payout policy, the correlation between the share of dividend-averse institutional shareholders and the dividend yield for the subsample with a lower θ (i.e., higher tax costs for dividends relative Cited by:

      What to do about the dividend tax cut: You may be tempted to change your investment strategy. Not so fast. Janu AM EST NEW YORK (CNN/Money) - With all the talk of President Bush.   Recent literature has claimed that the U.S. dividend tax cut caused a large increase in aggregate dividend payouts. I document four simple facts that call this claim into question. First, the post-tax cut increase in dividend payouts coincided with a surge in corporate profits, such that the dividend payout ratio did not rise. Second, share repurchases increased even more rapidly than Cited by:

    the dividend tax cut could have boosted the value of U.S. equities by roughly 6 percent. The likely valuation effects remain a relevant concern going forward, when Congress faces the decision of whether to allow the tax cuts to expire in , as provided for in current law. of (JGTRRA, also known as the Bush Tax Cuts) came up for debate in Congress. Amongst the tax rates that were set to increase were taxes on individual dividend tax income, which had been lowered in the JGTRRA. If the tax cuts expired, dividend taxes would rise from 15% to the s rate of up to %.


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2003 dividend tax cuts and the value of the firm by Alan J. Auerbach Download PDF EPUB FB2

The Dividend Tax Cuts and the Value of the Firm: An Event Study Alan J. Auerbach, Kevin A. Hassett. NBER Working Paper No. Issued in July NBER Program(s):Public Economics The "Jobs and Growth Tax Relief Act of " (JGTRA03) contained a number of significant tax provisions, but the most noteworthy may have been the reduction in dividend tax rates.

In the USA, Auerbach and Hassett () found support for the value creation of the dividend tax cuts. They noted that high-yielding firms registered higher abnormal returns than their low. Get this from a library. The dividend tax cuts and the value of the firm: an event study.

[Alan J Auerbach; Kevin A Hassett; National Bureau of Economic Research.] -- "The "Jobs and Growth Tax Relief Act of " (JGTRA03) contained a number of significant tax provisions, but the most noteworthy may have been the reduction in dividend tax rates. Downloadable. The "Jobs and Growth Tax Relief Act of " (JGTRA03) contained a number of significant tax provisions, but the most noteworthy may have been the reduction in dividend tax rates.

The political debate over the dividend tax reductions of took a number of surprising twists and turns. Accordingly, it is likely that the views of market participants concerning the probability of.

The Dividend Tax Cuts and the Value of the Firm: An Event Study Alan J. Auerbach and Kevin A. Hassett NBER Working Paper No. June JEL No. G12, H24 ABSTRACT The "Jobs and Growth Tax Relief Act of " (JGTRA03) contained a number of significant tax provisions, but the most noteworthy may have been the reduction in dividend tax.

See Tax Legislation: Law, Explanation and Analysis, CCH Tax and Accounting, [3] According to one study, there are certain conditions. Get this from a library. The Dividend Tax Cuts and the Value of the Firm: an Event Study.

[Alan J Auerbach; Kevin A Hassett] -- The "Jobs and Growth Tax Relief Act of " (JGTRA03) contained a number of significant tax provisions, but the most noteworthy may have been the reduction in dividend tax rates. The political. Event studies on dividend tax cuts by Auerbach and Hassett (), Gadarowski et al.

(), and Amromin et. () find that in general, firms experience positive and significant abnormal. dividend tax cut reduced top federal rate from % to 15% Question: Did it increase medium-run investment and labor earnings.

Dividend tax cuts reduce the cost of capital [Harberger; Feldstein ; Poterba Summers ] Investment responds File Size: KB. The dividend tax cut raised the after-tax value of a $1 dividend to high-income shareholders from cents to 85 cents, a 38 percent increase.

Thus, the cost of initiating or 1 While Julio and Ikenberry () have argued that the up-tick in dividend activity started before the tax cut. The Jobs and Growth Tax Relief Reconciliation Act of ("JGTRRA", Pub.L.

–27, Stat. ), was passed by the United States Congress on and signed into law by President George W. Bush on Nearly all of the cuts (individual rates, capital gains, dividends, estate tax) were set to expire after Among other provisions, the act accelerated certain tax Enacted by: the th United States Congress.

#ad#To appreciate this story, we have to go back in time to Januarybefore the tax cut was enacted. Table on page 60 in CBO’s Budget and Economic Outlook published in estimated Author: Donald L. Luskin. an alternative dividend tax cut that has substantially larger near-term effects.

(JEL C72, C78, C91) The Jobs and Growth Tax Relief Reconciliation Act of reduced the top fed-eral tax rate on individual dividend income in the United States from percent to 15 percent. The president projected that the tax cut would provide “near-term sup. This paper provides new evidence on the response of dividend payouts to dividend tax changes by comparing the dividend behavior of the majority of U.S.

firms who benefited from the tax cut to a smaller control group of firms—real estate investment trusts (REITs)—that did not benefit from the tax cut. I provide clear graphical.

no dividend tax cut. As a result, existing work on the real e⁄ects of dividend taxes has relied on indirect evidence such as the goodness-of-–t of alternative structural investment equations (Poterba and Summers ).

This paper tests for real e⁄ects of the dividend tax cut by using a set of una⁄ected. The Jobs and Growth Tax Relief Reconciliation Act of reduced the top federal tax rate on individual dividend income in the United States from % to 15%.

President George W. Bush argued that the tax cut would provide finear-term support to investmentfland ficapital to. But in the real world there remains one overwhelming reason why dividend policy is not irrelevant: tax.

The way dividends are taxed can have wide-ranging consequences for how a firm is run. CAPITAL TAX REFORM AND THE REAL ECONOMY: THE EFFECTS OF THE DIVIDEND TAX CUT Danny Yagan ONLINE APPENDIX Online Appendix A: Variable De–nitions in Terms of Tax Return Line Items Section II.C listed economic de–nitions of all variables used in this paper.

This appendix de–nes variables in terms of line items on tax Size: KB. Capital Tax Reform and the Real Economy: The Effects of the Dividend Tax Cut by Danny Yagan. Published in volumeis pages of American Economic Review, DecemberAbstract: This paper tests whether the dividend tax cut—one of the largest reforms ever to a US ca.

The tax cut provides an ideal setting for testing the impact of personal tax rates on firms' leverage for several reasons. First, the tax cut introduced a relatively large increase in the after-tax value of equity distributions.

Second, the tax cut came largely as a surprise to the market, so that we can treat it as an exogenous by:.

with substantial probability. Starting in Junethis became certain. The tax cut is scheduled to expire bybut the actual duration is contingent of political developments.6 This paper uses the dividend tax cut to estimate the effect of dividend taxes on File Size: 1MB.Alan J.

Auerbach & Kevin A. Hassett, "The Dividend Tax Cuts and the Value of the Firm: An Event Study," NBER Working PapersNational Bureau of Economic Research, Inc. Jeffrey R. Brown & Nellie Liang & Scott Weisbenner, The dividend tax cuts and the value of the firm an event study / "The "Jobs and Growth Tax Relief Act of " (JGTRA03) contained a number of significant tax provisions, but the most noteworthy may have been the reduction in dividend tax rates.

The political.