Dividend Taxation and Equity Value: The Canadian Tax Changes of 1986

Kenneth McKenzie and Aileen J. Thompson

Canadian Journal of Economics, 1995, vol. 28, issue 2, 463-72

Abstract: The 1986 Canadian federal budget, which increased the tax rate on dividends vis-a-vis capital gains, provides a natural experiment for examining the relationship between taxation and asset values. The authors employ a stock market event study to investigate the differential impact of this tax change on high- and low-dividend securities. To control for other new information contained in the budget, they focus on companies that issue both preferred (high-dividend) stocks and common (low-dividend) stocks. The authors find that abnormal returns are negatively related to dividend yields, which provides support for the hypothesis that taxes affect stock prices.

Date: 1995
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://links.jstor.org/sici?sici=0008-4085%2819950 ... TAEVT%3E2.0.CO%3B2-U (text/html)
only available to JSTOR subscribers

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:cje:issued:v:28:y:1995:i:2:p:463-72

Ordering information: This journal article can be ordered from
https://www.economic ... ionen/membership.php

Access Statistics for this article

Canadian Journal of Economics is currently edited by Zhiqi Chen

More articles in Canadian Journal of Economics from Canadian Economics Association Canadian Economics Association Prof. Werrner Antweiler, Treasurer UBC Sauder School of Business 2053 Main Mall Vancouver, BC, V6T 1Z2. Contact information at EDIRC.
Bibliographic data for series maintained by Prof. Werner Antweiler ().