Taxation and the Cash Flow Sensitivity of Dividends

10 Pages Posted: 4 Jul 2012 Last revised: 3 Apr 2013

Marcus Jacob

WHU - Otto Beisheim School of Management

Martin Jacob

WHU - Otto Beisheim School of Management

Date Written: July 4, 2012

Abstract

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

Suggested Citation

Jacob, Marcus and Jacob, Martin, Taxation and the Cash Flow Sensitivity of Dividends (July 4, 2012). Economics Letters, Vol. 118, No. 1, 2013. Available at SSRN: https://ssrn.com/abstract=2100300 or http://dx.doi.org/10.2139/ssrn.2100300

Marcus Jacob

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

Martin Jacob (Contact Author)

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
D-56179 Vallendar, 56179
Germany

HOME PAGE: http://www.whu.edu/steuer

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