Taxation and the Cash Flow Sensitivity of Dividends
10 Pages Posted: 4 Jul 2012 Last revised: 3 Apr 2013
Date Written: July 4, 2012
This paper investigates tax reasons for cross-sectional deviations from the general consensus in literature that a firm’s cash flow has a positive effect on dividend payout. We use a large multinational panel data set to show that the positive cash flow sensitivity of dividends is decreasing in dividend taxes.
Keywords: taxation, dividends, cash flow sensitivity
JEL Classification: G10, H24, H25
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