TY  - JOUR
AU  - Gordon,Roger
AU  - Dietz,Martin
TI  - Dividends and Taxes
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12292
PY  - 2006
Y2  - June 2006
UR  - http://www.nber.org/papers/w12292
L1  - http://www.nber.org/papers/w12292.pdf
N1  - Author contact info:
Roger H. Gordon
Department of Economics 0508
University of California, San Diego
9500 Gilman Drive, Dept. 0508
La Jolla, CA 92093
Tel: 858/534-4828
Fax: 858/534-7040
E-Mail: rogordon@ucsd.edu
M2  - featured in NBER digest on 2006-06-12
AB  - 	How do dividend taxes affect firm behavior and what are their distributional and efficiency effects? To answer these questions, the first problem is coming up with an explanation for why firms pay dividends, in spite of their tax penalty.
	This paper surveys three different models for why firms pay dividends, and then uses each model to examine the behavioral and efficiency effects of dividend taxes. The three models examined are: the %u201Cnew view,%u201D an agency cost explanation, and a signaling model.
	While all three models forecast dividends, their forecasts regarding other firm behavior, and their forecasts for the efficiency and distributional effects of a dividend tax, often differ. Given the evidence to date, we find the agency model is the one most consistent with the data.
ER  -