Taxes, earnings payout, and payout channel choice

Philipp Geiler and Luc Renneboog

Journal of International Financial Markets, Institutions and Money, 2015, vol. 37, issue C, 178-203

Abstract: We study the tax regulations in relation to dividends and capital gains over the last two decades for the UK in order to determine whether changes in tax regimes affect corporate payout policy (dividends, share repurchases, or a combination). While we can identify investors’ tax-driven preferences for a specific payout channel, we find no evidence of tax-induced clienteles. Firms do indeed not cater to the tax preferences of their shareholders (including individuals, pension funds, corporations). Other factors, such as equity-based compensation received by the CEO and investor sentiment in the form of optimism reduce the dividend payout and increase the use of share repurchases.

Keywords: Payout policy; Dividends; Share repurchases; Taxation; Regulation (search for similar items in EconPapers)
JEL-codes: G28 G30 G35 G38 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Working Paper: Taxes, Earnings Payout, and Payout Channel Choice (2015)
Working Paper: Taxes, earnings payout, and payout channel choice (2015)
Working Paper: Taxes, Earnings Payout, and Payout Channel Choice (2014)
Working Paper: Taxes, Earnings Payout, and Payout Channel Choice (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:37:y:2015:i:c:p:178-203

DOI: 10.1016/j.intfin.2015.01.005

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