A Problem of Financial Market Equilibrium When the Timing of Tax Payments is Indeterminate

If firms are indifferent about the timing of dividends, the government's cash flow from taxes on dividends is indeterminate. In an earlier paper, I showed in the context of a world without uncertainty that variations in tax receipts from this source would have no real effects. The extension of the analysis to a world of risk turns out to involve new elements that may be of some general interest. In particular, the conditions for neutrality seem less likely to be fulfilled in a practical context.