Tax‐efficient irregular payout methods: The case of B share schemes and capital repayments via a court‐approved scheme of arrangement

Dennis Oswald and Steven Young

Accounting and Business Research, 2008, vol. 38, issue 1, 49-70

Abstract: Advance corporation tax (ACT) increased the tax cost to UK firms of distributing cash to shareholders. We demonstrate how the tax cost arising from ACT payments affected the channels through which UK firms returned capital to shareholders. In particular, we document and describe two unconventional irregular payout methods that enabled firms to avoid paying ACT. Firms choosing these methods are associated with significantly greater ACT problems than a control sample of firms that opted for conventional self‐tender offers and special dividends. Event study tests indicate that the decision to adopt tax‐efficient payout methods created significant additional value for shareholders beyond the basic cash distribution decision.

Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1080/00014788.2008.9663319 (text/html)
Access to full text is restricted to 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:taf:acctbr:v:38:y:2008:i:1:p:49-70

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RABR20

DOI: 10.1080/00014788.2008.9663319

Access Statistics for this article

Accounting and Business Research is currently edited by Vivien Beattie

More articles in Accounting and Business Research from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().