Stock Dividend Announcement Effects in an Imputation Tax Environment

Hamish Anderson, Steven Cahan and Lawrence Rose

Journal of Business Finance & Accounting, 2001, vol. 28, issue 5‐6, 653-669

Abstract: A key question in asset pricing is the extent to which tax effects are passed through market prices or are capitalised in them. New Zealand stock dividends provide a useful window into this debate because of (1) the existence of both taxable and non‐taxable stock dividends, and (2) the particular form of imputation tax system which allows the full pass through of corporate taxes to the investor on the proportion of profits which are distributed either as cash or taxable stock dividends. We present evidence that investors value future tax benefits associated with imputation tax credits.

Date: 2001
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