NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Dividends, Share Repurchases, and Tax Clienteles: Evidence from the 2003 Reductions in Shareholder Taxes

Jennifer Blouin, Jana Raedy, Douglas Shackelford

NBER Working Paper No. 16129
Issued in June 2010
NBER Program(s):   PE

This paper jointly evaluates firm-level changes in investor composition and shareholder distributions following a 2003 reduction in the dividend and capital gains tax rates for individuals. We find that directors and officers, but not other individual investors, rebalanced their portfolios to maximize after-tax returns in light of the new tax rules. We also find that firms adjusted their distribution policy (specifically, dividends versus share repurchases) in a manner consistent with the altered tax incentives for individual investors. To our knowledge, this is the first paper to employ simultaneous equations to estimate both investor and managerial responses to the 2003 rate reductions. We find that estimating a system of equations leads to different inferences.

download in pdf format
   (274 K)

email paper

A non-technical summary of this paper is available in the November 2010 NBER digest.  You can sign up to receive the NBER Digest by email.

This paper is available as PDF (274 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w16129

Published: Blouin, Jennifer L., Jana S. Raedy, and Douglas A. Shackelford, “Dividends, Share Repurchases, and Tax Clienteles: Evidence from the 2003 Reductions in Shareholder Taxes,” The Accounting Review 86:3, May 2011, 887-914 .

Users who downloaded this paper also downloaded these:
Blouin, Raedy, and Shackelford w13601 Did Firms Substitute Dividends for Share Repurchases after the 2003 Reductions in Shareholder Tax Rates?
Bachmann, Elstner, and Sims w16143 Uncertainty and Economic Activity: Evidence from Business Survey Data
Barattieri, Basu, and Gottschalk w16130 Some Evidence on the Importance of Sticky Wages
Gourio and Miao w16157 Transitional Dynamics of Dividend and Capital Gains Tax Cuts
Chang, Hevia, and Loayza w16126 Privatization and Nationalization Cycles
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us