TY - JOUR
T1 - Are shareholder dividend taxes on corporate retained earnings impounded in equity prices? Additional evidence and analysis
AU - Dhaliwal, Dan
AU - Erickson, Merle
AU - Frank, Mary Margaret
AU - Banyi, Monica
N1 - Funding Information:
We appreciate comments and suggestions from B. Ayers, M. Hanlon, D. Kemsley, E. Maydew, J. Myers, D. Shackelford, T. Shevlin, R. Watts (the editor) and workshop participants at the University of Georgia, Penn State, University of Technology, Sydney Australia, and the 2001 UNC Tax Symposium on an earlier draft of this manuscript. We are especially grateful to T. Lys (the referee) for his thorough and constructive comments. Financial support from the Graduate School of Business at the University of Chicago is gratefully acknowledged.
PY - 2003/6
Y1 - 2003/6
N2 - The purpose of this paper is to evaluate the model used by Harris and Kemsley (J. Acc. Res. 37 (1999) 275), Harris et al. (J. Public Econ. 79 (2001) 569) and Collins and Kemsley (Acc. Rev. 75 (2000) 405), hereafter CHHK, and to investigate their empirical results. We demonstrate that the model underlying CHHK is flawed, and show that their interpretation of the data is incorrect. Finally, we find that after controlling for market to book ratio, Harris and Kemsley's first main result vanishes. In total, we reject CHHK's conclusions that equity prices are discounted for shareholder dividend taxes on retained earnings.
AB - The purpose of this paper is to evaluate the model used by Harris and Kemsley (J. Acc. Res. 37 (1999) 275), Harris et al. (J. Public Econ. 79 (2001) 569) and Collins and Kemsley (Acc. Rev. 75 (2000) 405), hereafter CHHK, and to investigate their empirical results. We demonstrate that the model underlying CHHK is flawed, and show that their interpretation of the data is incorrect. Finally, we find that after controlling for market to book ratio, Harris and Kemsley's first main result vanishes. In total, we reject CHHK's conclusions that equity prices are discounted for shareholder dividend taxes on retained earnings.
KW - Dividend
KW - Tax
KW - Tax capitalization
UR - http://www.scopus.com/inward/record.url?scp=0037677959&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=0037677959&partnerID=8YFLogxK
U2 - 10.1016/S0165-4101(03)00018-1
DO - 10.1016/S0165-4101(03)00018-1
M3 - Article
AN - SCOPUS:0037677959
SN - 0165-4101
VL - 35
SP - 179
EP - 200
JO - Journal of Accounting and Economics
JF - Journal of Accounting and Economics
IS - 2
ER -