We show that firms with the least elastic demand for equity capital should benefit the most from reductions in shareholder taxes. Consistent with this prediction, we find that, following 1997 and 2003 cuts in U.S. individual shareholder taxes, financially constrained firms, and particularly...

We demonstrate that firms' investment and job creation are influenced by shareholder taxes on capital gains and dividend. More importantly, the relation between shareholder taxes and firms' investment and job creation varies with financial constraint that firms face. Less financially constrained...