TY  - JOUR
AU  - Harris,Trevor S.
AU  - Hubbard,R. Glenn
AU  - Kemsley,Deen
TI  - The Share Price Effects of Dividend Taxes and Tax Imputation Credits
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7445
PY  - 1999
Y2  - December 1999
UR  - http://www.nber.org/papers/w7445
L1  - http://www.nber.org/papers/w7445.pdf
N1  - Author contact info:
Trevor Harris

R. Glenn Hubbard
Graduate School of Business
Columbia University, 101 Uris Hall
3022 Broadway
New York, NY  10027
Tel: 212/854-3493
Fax: 212/864-6184
E-Mail: rgh1@columbia.edu, ws2187@columbia.edu
AB  - We examine the hypothesis that dividend taxes are capitalized into share prices by focusing on investors' implicit valuations of retained earnings versus paid-in equity.  Retained earnings are distributable as taxable dividends, whereas paid-in equity is distributable as a tax-free return of capital. Consistent with dividend tax capitalization, firm-level results for the United States indicate that accumulated retained earnings are valued less per unit than contributed capital.  In addition, differences in dividend tax rates across U.S. tax regimes are associated with predictable differences in the magnitude of the implied tax discount for retained earnings, as are differences in dividend tax rates across Australia, Japan, France, Germany, and the United Kingdom.
ER  -