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Stock Dividend Announcement Effects in an Imputation Tax Environment
Author(s) -
Anderson Hamish,
Cahan Steven,
Rose Lawrence C.
Publication year - 2001
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/1468-5957.00388
Subject(s) - taxable income , dividend , monetary economics , dividend tax , business , stock (firearms) , economics , financial economics , tax reform , finance , accounting , state income tax , public economics , gross income , mechanical engineering , engineering
A key question in asset pricing is the extent to which tax effects are passed through market prices or are capitalised in them. New Zealand stock dividends provide a useful window into this debate because of (1) the existence of both taxable and non‐taxable stock dividends, and (2) the particular form of imputation tax system which allows the full pass through of corporate taxes to the investor on the proportion of profits which are distributed either as cash or taxable stock dividends. We present evidence that investors value future tax benefits associated with imputation tax credits.