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Corporate Investment and Dividend Tax Imputation
Author(s) -
Boyle Glenn W.
Publication year - 1996
Publication title -
financial review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.621
H-Index - 47
eISSN - 1540-6288
pISSN - 0732-8516
DOI - 10.1111/j.1540-6288.1996.tb00871.x
Subject(s) - dividend , shareholder , economics , deferral , dividend yield , dividend policy , monetary economics , dividend tax , investment (military) , imputation (statistics) , financial economics , business , finance , tax reform , corporate governance , market economy , state income tax , machine learning , politics , political science , missing data , computer science , gross income , law
The capital investment/dividend decision of the firm is analyzed under alternative assumptions about the system of dividend taxation. Relative to the classical system, imputation can yield (1) more disagreement amongst shareholders as regards the optimal investment plan, (2) less capital investment on aggregate and (3) fewer gains from mergers. Moreover, in contrast to the classical system, shareholders with high marginal tax rates can be more disadvantaged by dividend deferral than shareholders with low marginal tax rates.