Individual investors’ dividend taxes and managerial myopia

Yuan Gao, Xiaoke Cheng, Wenyu Zhang and Haomin Shen

Finance Research Letters, 2024, vol. 62, issue PB

Abstract: We use a unique setting of the Dividend Tax Reform in China to investigate the impact of differential dividends taxation on managerial myopia. We find that firms prefer to mitigate managerial myopia when the dividends taxes imposed on their individual investors decrease. Moreover, additional analysis presents that the negative effect is more salient for firms with higher investor preference, larger proportions of individual investors, and greater myopic pressures. The results indicate that differential dividends taxation induced lock-in adversely affects managerial myopia.

Keywords: Dividend tax; Myopia; Investor horizons; Short-termism; Capital gains taxes; Lock-in effect (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:62:y:2024:i:pb:s1544612324003003

DOI: 10.1016/j.frl.2024.105270

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