The dividend puzzle and tax: a note

Frank Strobel

Economics Bulletin, 2011, vol. 31, issue 3, 2736-2743

Abstract: The dividend puzzle, where consumers prefer capital gains to dividends due to differences in taxation, is examined in a two-period general equilibrium model with heterogeneous agents. Stressing the importance of interfirm equity holdings and their tax treatment, different scenarios where dividends are paid to some or all consumers in equilibrium are exposed, giving rise to the potential formation of tax clienteles.

Keywords: dividend puzzle; taxation; interfirm equity; tax clienteles (search for similar items in EconPapers)
JEL-codes: G3 (search for similar items in EconPapers)
Date: 2011-09-28
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