University of North Carolina, Chapel Hill
Kenan-Flagler Business School
Campus Box 3490, McColl Building
Chapel Hill, NC 27599-3490
NBER Working Papers and Publications
|June 2010||Dividends, Share Repurchases, and Tax Clienteles: Evidence from the 2003 Reductions in Shareholder Taxes|
with Jennifer Blouin, Douglas Shackelford: w16129
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.
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 .
|January 2010||Research in Accounting for Income Taxes|
with John Graham, Douglas Shackelford: w15665
This paper comprehensively reviews Accounting for Income Taxes (AFIT). The first half provides background and a primer on AFIT. The second half reviews existing studies in detail and offers suggestions for future research. We emphasize the research questions that have been addressed (most of which relate to whether the tax accounts are used to manage earnings, and whether the tax accounts are priced by equity market participants) and highlight areas that have not received much research attention. We close with a call for a theoretical framework, more study of the inconsistencies between research and practice, and improved econometrics.
Published: Graham, John R. & Raedy, Jana S. & Shackelford, Douglas A., 2012. "Research in accounting for income taxes," Journal of Accounting and Economics, Elsevier, vol. 53(1), pages 412-434. citation courtesy of
|November 2007||Did Firms Substitute Dividends for Share Repurchases after the 2003 Reductions in Shareholder Tax Rates?|
with Jennifer L. Blouin, Douglas A. Shackelford: w13601
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.
Published: Article Citation: Jennifer L. Blouin, Jana S. Raedy, and Douglas A. Shackelford (2011) Dividends, Share Repurchases, and Tax Clienteles: Evidence from the 2003 Reductions in Shareholder Taxes. The Accounting Review: May 2011, Vol. 86, No. 3, pp. 887-914.