Investors’ Payout-form Preference and Taxes

Abdelaziz Chazi, Alexandra Theodossioub and Zaher Zantout

Finance Working Papers from School of Business Administration, American University of Sharjah

Abstract: We find the form of U.S. corporate cash payout to shareholders often relevant to share price and in different directions at different times. Regularly cash-dividend paying firms have a significant share price premium compared to regularly stock-repurchasing firms in the early 1970s, but this premium exhibits a significant general negative trend and turns into a discount in the mid-to-late 2000s. Also, the premium (discount) is significantly related to the time-series changes in the differential tax burden on dividends and long-term capital gains. It is not related to the excess market return.

Keywords: Form of corporate cash payout; Investors’ preference; Taxes; Investors’ rationality (search for similar items in EconPapers)
JEL-codes: G11 G35 (search for similar items in EconPapers)
Pages: 56 pages
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Persistent link: https://EconPapers.repec.org/RePEc:sha:finwps:06-05/2013

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