Individual investors’ dividend tax reform and stock price crash risk

Xinyao Yang, Zhaoyi Liu and Tao Li

Finance Research Letters, 2023, vol. 54, issue C

Abstract: This paper examines the effect of individual investors’ dividend tax on stock price crash risk. By introducing the implementation of dividend tax reform (DTR) for individual investors, we present strong evidence that the reduction of the individual investors' dividend tax reduces the stock price crash risk. Mechanism analysis shows that DTR reduces the stock price crash risk by enhancing investor supervision and reducing the stock selling behavior of executives. Furthermore, DTR also reduce the stock price synchronicity. By revealing the effect of the individual investors’ DTR on stock price crash risk, our study presents a clear policy to regulators concerned with high-quality development of the capital market.

Keywords: Dividend tax reform; Individual investor; Stock price crash risk; Capital market efficiency (search for similar items in EconPapers)
JEL-codes: G17 G24 G35 K34 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:54:y:2023:i:c:s1544612323001198

DOI: 10.1016/j.frl.2023.103746

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