Examining the Impact of the 1986 Tax Reform Act on Corporate Dividend Policy: A New Methodology

Casey, K. Mike; Anderson, Dwight C.; Mesak, Hani I.; Dickens, Ross N.

doi:10.1111/j.1540-6288.1999.tb00461.x

Cited by 21 publications

(13 citation statements)

References 38 publications

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“…Despite the contrasting macroeconomic environments between these two periods, which leads to a higher likelihood of supporting the industry effect hypothesis, the authors find only a modest industry effect and call for further research to more fully explore this issue. Casey, Anderson, Mesak, and Dickens (1999) investigate the effects of the 1986 Tax Reform Act (TRA) on corporate dividend policy and study whether dividend policy within different industries responds differently to the TRA's passage. Consistent with the findings of Dempsey et al (1993), they find weak support for an industry-related dividend effect.…”

Section: Industry Classification and Dividend Policymentioning

confidence: 99%

Impact of financial and multinational operations on manager perceptions of dividends

Baker

Dutta

Saadi

2008

Global Finance Journal

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Section: Industry Classification and Dividend Policymentioning

confidence: 99%

Impact of financial and multinational operations on manager perceptions of dividends

Baker

Dutta

Saadi

2008

Global Finance Journal

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“…Anti-thin capitalization rules enactment period (DYear): in previous literature concerning the impact of tax reform on the dependent variables, the impact of the year dummy variable on enterprise is explored (Casey et al 1999;Wang and Chen, 2004;Wang and Chen, 2007;Chen et al 2007). This paper uses dummy variable (DYear) to measure the effect of the anti-thin capitalization.…”

Section: Independent Variablesmentioning

confidence: 99%

The Impact of Anti-Thin Capitalization Rules on Capital Structure in Taiwan

Shieh¹,

Ou²,

Wang³

2014

IJEF

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This paper investigates the impact of the enactment of the anti-thin capitalization rules on capital structure after the enactment of the anti-thin capitalization rules in Taiwan. According to the theoretical derivation, companies with lower shareholder imputed tax credits ratio tend to have greater debt-to-equity ratio, while companies with higher surtax on undistributed earnings ratio tend to have higher debt-to-equity ratio. This finding is consistent with the hypotheses of this study. However, the relationships between interest-bearing liability rate, marginal income tax rate and debt-to-equity ratios are uncertain.Using 2006-2012 sample data for the empirical study, this paper finds that enterprise's total debt-to-equity ratios significantly decreases after the enactment of the anti-thin capitalization rules, and provisions preventing capital weakening have policy effectiveness. The shareholder imputed tax credits ratio and total debt-to-equity ratio are negatively correlated, while interest-bearing liability rate, marginal income tax rate, and surtax on undistributed earnings ratio, are positively correlated with total debt-to-equity ratio. This finding supports the hypotheses of this study. However, marginal income tax rate is lack of significance. Regardless of the enactment of the anti-thin capitalization rules, pledge ratios, investment growth opportunities, firm size and ownership of director and supervisor ratios are positively correlated with total debt-to-equity ratio; non-debt tax shields, R&D ratio and profitability are negatively correlated with total debt-to-equity ratio, which are also consistent with the expected results of this paper.

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“…7 Prior to the 2005 tax reform, the tax rate on 5 Examples of studies of the US 1986 tax reform include Ben-Horim, Hochman and Palmon (1987), Bolster and Janjigian (1991) and Casey et al (1999). 6 Examples of other studies of the US tax reform of 2003 include Brown, Liang and Weisbenner (2004), Blouin, Raedy and Shackelford (2004) and Nam, Wang and Zhang (2004).…”

Section: Dividend Taxation Before the 2005 Reformmentioning

confidence: 99%

Anticipating Tax Changes: Evidence from the Finnish Corporate Income Tax Reform of 2005*

Kari¹,

Karikallio²,

Pirttilä

2008

Fiscal Studies

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Using register-based panel data covering all Finnish firms from 1999 to 2004, we examine how corporations anticipated the 2005 dividend tax increase via changes in their dividend and investment policies. The Finnish capital and corporate income tax reform of 2005 creates a useful opportunity to measure this behaviour, since it involves exogenous variation in the tax treatment of different types of firms. The estimation results reveal that those firms that anticipated a dividend tax hike increased their dividend payouts in a statistically significant way. This increase was not accompanied by a reduction in investment activities, but rather was associated with increased indebtedness in non-listed firms. The results also suggest that the timing of dividend distributions probably offsets much of the potential for increased dividend tax revenue following the reform.

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Examining the Impact of the 1986 Tax Reform Act on Corporate Dividend Policy: A New Methodology

Cited by 21 publications

References 38 publications

Impact of financial and multinational operations on manager perceptions of dividends

Impact of financial and multinational operations on manager perceptions of dividends

The Impact of Anti-Thin Capitalization Rules on Capital Structure in Taiwan

Anticipating Tax Changes: Evidence from the Finnish Corporate Income Tax Reform of 2005*

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