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T he D ividend P uzzle : A n A ustralian S olution ?
Author(s) -
Nigol Robert E.G.
Publication year - 1992
Publication title -
australian accounting review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.551
H-Index - 36
eISSN - 1835-2561
pISSN - 1035-6908
DOI - 10.1111/j.1835-2561.1992.tb00138.x
Subject(s) - dividend , economics , dividend tax , dividend policy , asset (computer security) , capital gains tax , financial economics , tax policy , imputation (statistics) , double taxation , monetary economics , accounting , business , finance , tax reform , ad valorem tax , public economics , state income tax , gross income , computer security , machine learning , computer science , missing data
In the latter half of the 1980s, Australia made changes to its taxation law which affected the economics of asset ownership, particularly share ownership. The first of these changes was the introduction in September 1985 of a general tax on capital gains. The second was the virtual abolition of company tax through the introduction of tax imputation. In this changed tax environment it is argued that where the payment of franked dividends is concerned, there is an optimal dividend policy: companies should pay dividends to the limit of their franking account balances. In the case of unfranked dividends it is argued that there is no optimal policy and that Miller and Modigliani's clientele theory applies. The paper describes an analysis of the dividend payout ratios of the top 422 listed Australian companies from 1982 to 1990.