Shareholder Income Taxes and the Relation between Earnings and Returns
The purpose of this study is to investigate whether and how shareholder‐level taxes affect earnings response coefficients (ERCs). Our tests indicate that when the tax rate on dividends increases, ERCs decrease for firms with high levels of dividend yield and whose marginal investor is likely to be a...
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| Veröffentlicht in: | Contemporary accounting research 2005-09, Vol.22 (3), p.587-616 |
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| container_end_page | 616 |
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| container_title | Contemporary accounting research |
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| creator | DHALIWAL, DAN S. ERICKSON, MERLE M. LI, OLIVER ZHEN |
| description | The purpose of this study is to investigate whether and how shareholder‐level taxes affect earnings response coefficients (ERCs). Our tests indicate that when the tax rate on dividends increases, ERCs decrease for firms with high levels of dividend yield and whose marginal investor is likely to be an individual. For firms with high levels of share repurchase yield and whose marginal investor is likely to be an individual, an increase in dividend tax rate has no discernible effect on ERCs. These results are consistent with the notion that the tax penalty on dividends, relative to capital gains, reduces the earnings‐return relation. |
| doi_str_mv | 10.1506/9QEL-CKDY-MJ40-0QDQ |
| format | Article |
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Our tests indicate that when the tax rate on dividends increases, ERCs decrease for firms with high levels of dividend yield and whose marginal investor is likely to be an individual. For firms with high levels of share repurchase yield and whose marginal investor is likely to be an individual, an increase in dividend tax rate has no discernible effect on ERCs. These results are consistent with the notion that the tax penalty on dividends, relative to capital gains, reduces the earnings‐return relation.</description><subject>Business accounting</subject><subject>Capital gains</subject><subject>Capital tax</subject><subject>Dividend</subject><subject>Dividends</subject><subject>Earnings</subject><subject>Earnings response coefficient</subject><subject>Empirical tests</subject><subject>Financial management</subject><subject>Income tax</subject><subject>Income taxes</subject><subject>Institutional ownership</subject><subject>Ownership and control</subject><subject>Rates of return</subject><subject>Shareholder taxes</subject><subject>Stock returns</subject><subject>Stockholders</subject><subject>Studies</subject><subject>Tax rates</subject><issn>0823-9150</issn><issn>1911-3846</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2005</creationdate><recordtype>article</recordtype><recordid>eNqNkDtPwzAURi0EEqXwC1giBraAH0nsjFXoCwq0pQjRxXKTG5qSJsVO1fbf4yiIgYnJg8-5-nQQuiT4hvg4uA0n3ZEbPdy9u4_3Hnbx5G5yhFokJMRlwguOUQsLytzQwqfozJgVxjjwuGih3stSaViWeQLaGRZxuQZnpvZgHFUkTrUEZwq5qrKycBZQ7QAKp6t0kRUfDTGFaqsLc45OUpUbuPh52-i1151FA3f03B9GnZEbe9zndgBXnuCYi8THTLFUcaBMUJ7i1APfJ7H9DFI_ZJT5CRWwCKmFIKRK8UAw1kbXzd2NLr-2YCq5zkwMea4KKLdGMs4x4z6x4NUfcFXaoXabJKFHKRb2XBuxBop1aYyGVG50tlb6IAmWdVhZh5V1WFmHlXVYa4nG2mU5HP6jyKgz7dKQW9Vt1MxUsP9Vlf6UAbe75dtTX47FYBzN5wMZsG_d24ve</recordid><startdate>20050901</startdate><enddate>20050901</enddate><creator>DHALIWAL, DAN S.</creator><creator>ERICKSON, MERLE M.</creator><creator>LI, OLIVER ZHEN</creator><general>Blackwell Publishing Ltd</general><general>Canadian Academic Accounting Association</general><scope>BSCLL</scope><scope>AAYXX</scope><scope>CITATION</scope><scope>8BJ</scope><scope>FQK</scope><scope>JBE</scope></search><sort><creationdate>20050901</creationdate><title>Shareholder Income Taxes and the Relation between Earnings and Returns</title><author>DHALIWAL, DAN S. ; ERICKSON, MERLE M. ; LI, OLIVER ZHEN</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c4757-917a487078d503a3fa7e23827f0f4e551c8706f593235d28eb923fae92aa76833</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2005</creationdate><topic>Business accounting</topic><topic>Capital gains</topic><topic>Capital tax</topic><topic>Dividend</topic><topic>Dividends</topic><topic>Earnings</topic><topic>Earnings response coefficient</topic><topic>Empirical tests</topic><topic>Financial management</topic><topic>Income tax</topic><topic>Income taxes</topic><topic>Institutional ownership</topic><topic>Ownership and control</topic><topic>Rates of return</topic><topic>Shareholder taxes</topic><topic>Stock returns</topic><topic>Stockholders</topic><topic>Studies</topic><topic>Tax rates</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>DHALIWAL, DAN S.</creatorcontrib><creatorcontrib>ERICKSON, MERLE M.</creatorcontrib><creatorcontrib>LI, OLIVER ZHEN</creatorcontrib><collection>Istex</collection><collection>CrossRef</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>International Bibliography of the Social Sciences</collection><collection>International Bibliography of the Social Sciences</collection><jtitle>Contemporary accounting research</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>DHALIWAL, DAN S.</au><au>ERICKSON, MERLE M.</au><au>LI, OLIVER ZHEN</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Shareholder Income Taxes and the Relation between Earnings and Returns</atitle><jtitle>Contemporary accounting research</jtitle><date>2005-09-01</date><risdate>2005</risdate><volume>22</volume><issue>3</issue><spage>587</spage><epage>616</epage><pages>587-616</pages><issn>0823-9150</issn><eissn>1911-3846</eissn><abstract>The purpose of this study is to investigate whether and how shareholder‐level taxes affect earnings response coefficients (ERCs). Our tests indicate that when the tax rate on dividends increases, ERCs decrease for firms with high levels of dividend yield and whose marginal investor is likely to be an individual. For firms with high levels of share repurchase yield and whose marginal investor is likely to be an individual, an increase in dividend tax rate has no discernible effect on ERCs. These results are consistent with the notion that the tax penalty on dividends, relative to capital gains, reduces the earnings‐return relation.</abstract><cop>Oxford, UK</cop><pub>Blackwell Publishing Ltd</pub><doi>10.1506/9QEL-CKDY-MJ40-0QDQ</doi><tpages>30</tpages></addata></record> |
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| ispartof | Contemporary accounting research, 2005-09, Vol.22 (3), p.587-616 |
| issn | 0823-9150 1911-3846 |
| language | eng |
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| source | Access via Wiley Online Library |
| subjects | Business accounting Capital gains Capital tax Dividend Dividends Earnings Earnings response coefficient Empirical tests Financial management Income tax Income taxes Institutional ownership Ownership and control Rates of return Shareholder taxes Stock returns Stockholders Studies Tax rates |
| title | Shareholder Income Taxes and the Relation between Earnings and Returns |
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