Dividend Taxation and Equity Value: The Canadian Tax Changes of 1986.
The 1986 Canadian federal budget, which increased the tax rate on dividends vis-a-vis capital gains, provides a natural experiment for examining the relationship between taxation and asset values. The authors employ a stock market event study to investigate the differential impact of this tax change on high- and low-dividend securities. To control for other new information contained in the budget, they focus on companies that issue both preferred (high-dividend) stocks and common (low-dividend) stocks. The authors find that abnormal returns are negatively related to dividend yields, which provides support for the hypothesis that taxes affect stock prices.
Year of publication: |
1995
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Authors: | McKenzie, Kenneth J. ; Thompson, Aileen J. |
Published in: |
Canadian Journal of Economics. - Canadian Economics Association - CEA. - Vol. 28.1995, 2, p. 463-72
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Publisher: |
Canadian Economics Association - CEA |
Saved in:
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