SSRN-New Evidence that Taxes Affect the Valuation of Dividends by James Poterba, Lawrence Summers

  Paper Stats:
   Abstract Views: 476
   Downloads: 13

New Evidence that Taxes Affect the Valuation of Dividends

JAMES M. POTERBA
Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)
LAWRENCE H. SUMMERS
Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

February 1985

NBER Working Paper No. W1288

Abstract:
This paper uses British data to examine the effects of dividend taxes on investors` relative valuation of dividends and capital gains. British data offer great potential to illuminate the dividends and taxes question, since there have been two radical changes and several minor reforms in British dividend tax policy during the last twenty-five years. Studying the relationship between dividends and stockprice movements during different tax regimes offers an ideal controlled experiment for assessing the effects of taxes on investors` valuation of dividends. Using daily data on a small sample of firms, and monthly data on a much broader sample, we find clear evidence that taxes change equilibrium relationships between dividend yields and market returns. These findings suggest that taxes are important determinants of security market equilibrium, and deepen the puzzle of why firms pay dividends.

Working Paper Series

Suggested Citation

Poterba, James M. and Summers, Lawrence H., "New Evidence that Taxes Affect the Valuation of Dividends" (February 1985). NBER Working Paper Series, Vol. w1288, pp. -, 1985 Available at SSRN: http://ssrn.com/abstract=321332

Export in: Export What's this?

Contact Information for JAMES M. POTERBA (Contact Author) Email address for JAMES M. POTERBA Massachusetts Institute of Technology (MIT) - Department of Economics 50 Memorial Drive E52-350 Cambridge , MA 02142 United States 617-253-6673 (Phone) 617-253-1330 (Fax)
(No e-mail address available for JAMES M. POTERBA National Bureau of Economic Research (NBER) 1050 Massachusetts Avenue Cambridge , MA 02138 United States
Contact Information for LAWRENCE H. SUMMERS Email address for LAWRENCE H. SUMMERS Harvard University - Department of Economics Littauer Center Cambridge , MA 02138 United States 617-495-1502 (Phone) 617-495-8550 (Fax)
(No e-mail address available for LAWRENCE H. SUMMERS National Bureau of Economic Research (NBER) 1050 Massachusetts Avenue Cambridge , MA 02138 United States

SSRN Electronic Paper Collection

Add to
Shopping Cart Email Abstract or
URL Add to
My Briefcase

If you are experiencing download difficulties, click here.

This is a National Bureau of Economic Research Paper. The NBER charges a fee of $5.00 for this paper and you will be asked for a credit card after you click on the Download Document button above.

FREE DOWNLOADS FOR NBER SUBSCRIBERS
If your organization is an NBER Corporate Associate, or a subscriber to the full NBER paper series, or you are an individual residing in a non-OECD developing nation you may download this paper without charge. Please click here. If you pass the NBER security clearance this paper will delivered to you immediately.

If you do not pass you will be sent to the SSRN credit card page to complete the charge process.

Journalists may request complimentary copies of individual Working Papers by sending email to Donna Zerwitz, Mailto:zerwitz@nber.org

Format Type	Number of Downloads	Date Posted	File Size	File name
Acrobat File	13	Jun 19, 2004	1463K	nber_w1288.pdf

The latest version of Adobe Acrobat Reader or Adobe Acrobat is required to view this paper. To obtain your free copy, click on the Acrobat button.

SSRN Resources

To search for other abstracts in the SSRN archival database, click here.

To order a membership to an SSRN Network or to subscribe to one or more of SSRN's journals, go to our online subscription request form.

To go to SSRN's main web site (www.ssrn.com), click here.