Does a change in dividend tax rates in the U.S. affect equity prices of non-U.S. stocks?

David G. Kenchington ()
Additional contact information
David G. Kenchington: Arizona State University

Review of Accounting Studies, 2019, vol. 24, issue 2, No 7, 593-628

Abstract: Abstract I investigate the link between dividend taxes and stock prices in a global setting. Based on findings from an open-economy after-tax capital asset pricing model, I predict that, when the U.S. cut its dividend tax rate in 2003, stock prices will increase for high-dividend yield foreign firms that are eligible for a U.S. income tax treaty. I examine returns for firms headquartered in treaty countries and find results consistent with this prediction. In further tests, I find that the same relation does not hold for firms in nontreaty countries. My paper is the first to provide direct evidence about whether and how dividend taxes affect equity prices across an integrated global economy.

Keywords: Shareholder dividend taxes; Tax capitalization; Stock prices; Expected stock returns (search for similar items in EconPapers)
JEL-codes: G12 H24 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11142-019-9489-z Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:reaccs:v:24:y:2019:i:2:d:10.1007_s11142-019-9489-z

Ordering information: This journal article can be ordered from
http://www.springer.com/accounting/journal/11142

DOI: 10.1007/s11142-019-9489-z

Access Statistics for this article

Review of Accounting Studies is currently edited by Paul Fischer

More articles in Review of Accounting Studies from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().