Mitigating Shareholder Taxation in Small Open Economies?

Martin Jacob () and Jan Södersten ()
Additional contact information
Martin Jacob: WHU-Otto Beisheim School of Management and Uppsala Center for Fiscal Studies

Finnish Economic Papers, 2013, vol. 26, issue 1, 1-12

Abstract: This article reconsiders the role of dividend taxation and its effect on the cost of capital for small firms. Using a simple portfolio model for small open economies, we show that an isolated increase in dividend taxes on large companies unambiguously decreases the required rate of return on small companies. A dividend tax increase for both large and small companies may moreover lead to the counter-intuitive result of decreasing the cost of capital for small firms. For different small open economies, we further provide statistics on the correlation between the return of large and small firms that drives the counter-intuitive result.

JEL-codes: H24 H25 (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.dropbox.com/s/712x36zszrmrwzr/fep12013_jacob_and_sodersten.pdf (application/pdf)

Related works:
Working Paper: Mitigating shareholder taxation in small open economies? (2012)
Working Paper: Mitigating shareholder taxation in small open economies? (2012)
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:fep:journl:v:26:y:2013:i:1:p:1-12

Access Statistics for this article

More articles in Finnish Economic Papers from Finnish Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Editorial Secretary ( this e-mail address is bad, please contact ).