TY  - JOUR
AU  - Blouin,Jennifer L.
AU  - Raedy,Jana Smith
AU  - Shackelford,Douglas A.
TI  - Did Firms Substitute Dividends for Share Repurchases after the 2003 Reductions in Shareholder Tax Rates?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13601
PY  - 2007
Y2  - November 2007
UR  - http://www.nber.org/papers/w13601
L1  - http://www.nber.org/papers/w13601.pdf
N1  - Author contact info:
Jennifer Blouin
University of Pennsylvania
The Wharton School
3620 Locust Walk
1315 Steinberg Hall-Dietrich Hall
Philadelphia, PA  19104-6365
Tel: 215-898-1266
E-Mail: blouin@wharton.upenn.edu

Jana Raedy
University of North Carolina, Chapel Hill
Kenan-Flagler Business School
Campus Box 3490, McColl Building
Chapel Hill, NC  27599-3490
E-Mail: jana_raedy@unc.edu

Douglas Shackelford
University of North Carolina at Chapel Hill
Kenan-Flagler Business School
Campus Box 3490, McColl Building
Chapel Hill, NC  27599-3490
Tel: 919/962-3197
Fax: 919/962-4727
E-Mail: doug_shack@unc.edu
AB  - This paper tests whether firms altered their dividend and share repurchase policies in response to the 2003 reductions in shareholder tax rates.  We predict that firms substituted dividends for repurchases, because the reduction in dividend tax rates exceeded the reduction in the capital gains tax rates.  As expected, we find substitution and find that it is increasing in the percentage of the company owned by individual investors, the only shareholders affected by the legislation.  These findings are consistent with boards of directors considering the tax preferences of individual stockholders (particularly officers and managers) when setting dividend and share repurchase policies.
ER  -