Income Taxation Regulation and Companies’ Behaviour: Is the Romanian Companies’ Dividend Policy Influenced by the Changes in Income Taxation?
Romanian Journal of Economic Forecasting, Volume: 10, Issue: 1, Pages: 76-93, 2009
18 Pages Posted: 20 Dec 2012
Date Written: January 1, 2009
Abstract
This paper analyzes the dividend payout by Romanian companies listed on the Bucharest Stock Exchange in connection with the changes in corporate taxes. If the tax burden on corporate gross incomes is increasing, the companies’ management can follow two reasons in deciding the dividend payout: to allocate more for investments, or to increase the dividend ratio. Each of these decisions can be argued based on Corporate Finance principles, depending on the management objectives. This paper found no significant correlation between the dividend policy and the corporate tax burden. However, the dividend payout reacted when the regulations related to the tax treatment of incomes were changed in 2005. Moreover, the dividend policy seems to be sensitive to the ownership structure, which can be explained by the impact of some agency problems.
Keywords: dividend payout, taxation, agency problem, emergent markets
JEL Classification: G34, G35, G38
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
What Do We Know About Capital Structure? Some Evidence from International Data
By Raghuram G. Rajan and Luigi Zingales
-
The Theory and Practice of Corporate Finance: Evidence from the Field
By John R. Graham and Campbell R. Harvey
-
The Theory and Practice of Corporate Finance: The Data
By John R. Graham and Campbell R. Harvey
-
Market Timing and Capital Structure
By Malcolm P. Baker and Jeffrey Wurgler
-
Market Timing and Capital Structure
By Malcolm P. Baker and Jeffrey Wurgler
-
Testing Tradeoff and Pecking Order Predictions About Dividends and Debt
By Eugene F. Fama and Kenneth R. French
-
Testing Static Trade-Off Against Pecking Order Models of Capital Structure
-
Optimal Capital Structure Under Corporate and Personal Taxation
By Harry Deangelo and Ronald W. Masulis