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- Title
The Role of Personal Taxes in Corporate Decisions: An Empirical Analysis of Share Repurchases and Dividends.
- Authors
Lie, Erik; Lie, Heidi J.
- Abstract
This study investigates the impact of personal taxation on corporate managers' choices between share repurchases and dividends as a means of disbursing cash. Consistent with the notion that personal taxation influences the choice of disbursement method, we find that managers are more likely to choose a share repurchase if the firm has a low dividend yield, if the firm's stock has experienced losses or small recent capital gains, and if the payout occurred before the Tax Reform Act of 1986. Further, managers are more sensitive to the shareholders' tax situations if institutional investors hold a large fraction of the shares.
- Subjects
INCOME tax; DIVIDENDS; STOCK repurchasing; CORPORATE finance; TAXATION; INSTITUTIONAL investments
- Publication
Journal of Financial & Quantitative Analysis, 1999, Vol 34, Issue 4, p533
- ISSN
0022-1090
- Publication type
Article
- DOI
10.2307/2676233