Adding shareholder value through dividend policy: Evidence from the United Kingdom on tax-based shareholder clienteles
This paper addresses the question of dividend clienteles based on shareholder-level taxation. In the United Kingdom in 1997, radical changes were made to the way in which the dominant shareholder clientele was taxed on dividend income. These changes provided a unique quasi-experimental opportunity f...
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| Format: | Article |
| Language: | English |
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AOSIS
2008-04-01
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| Series: | Journal of Economic and Financial Sciences |
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| Online Access: | https://jefjournal.org.za/index.php/jef/article/view/359 |
| _version_ | 1818792215958257664 |
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| author | Sheila Killian |
| author_facet | Sheila Killian |
| author_sort | Sheila Killian |
| collection | DOAJ |
| description | This paper addresses the question of dividend clienteles based on shareholder-level taxation. In the United Kingdom in 1997, radical changes were made to the way in which the dominant shareholder clientele was taxed on dividend income. These changes provided a unique quasi-experimental opportunity for a direct test of dividend clienteles, and of tax theories. This issue is central to policy formation, and to predicting the likely impact on shareholder value of changes to the dividend policy pursued by firms.
Evidence is presented of two distinct tax-based clienteles in the United Kingdom, with contrasting preferences, one of which was strong enough to influence payout in the firms in which this clientele invested. The implication for South African firms is that, as the tax system changes, the payout preference of shareholders may also change. It is imperative that corporate financial managers react to these clienteles, and their requirements. |
| first_indexed | 2024-12-18T15:23:43Z |
| format | Article |
| id | doaj.art-e30601880185415490d1ab9dbaf4665b |
| institution | Directory Open Access Journal |
| issn | 1995-7076 2312-2803 |
| language | English |
| last_indexed | 2024-12-18T15:23:43Z |
| publishDate | 2008-04-01 |
| publisher | AOSIS |
| record_format | Article |
| series | Journal of Economic and Financial Sciences |
| spelling | doaj.art-e30601880185415490d1ab9dbaf4665b2022-12-21T21:03:19ZengAOSISJournal of Economic and Financial Sciences1995-70762312-28032008-04-0121577010.4102/jef.v2i1.359300Adding shareholder value through dividend policy: Evidence from the United Kingdom on tax-based shareholder clientelesSheila Killian0University of LimerickThis paper addresses the question of dividend clienteles based on shareholder-level taxation. In the United Kingdom in 1997, radical changes were made to the way in which the dominant shareholder clientele was taxed on dividend income. These changes provided a unique quasi-experimental opportunity for a direct test of dividend clienteles, and of tax theories. This issue is central to policy formation, and to predicting the likely impact on shareholder value of changes to the dividend policy pursued by firms. Evidence is presented of two distinct tax-based clienteles in the United Kingdom, with contrasting preferences, one of which was strong enough to influence payout in the firms in which this clientele invested. The implication for South African firms is that, as the tax system changes, the payout preference of shareholders may also change. It is imperative that corporate financial managers react to these clienteles, and their requirements.https://jefjournal.org.za/index.php/jef/article/view/359taxationdividendsclientelesshareholder valueUnited Kingdom |
| spellingShingle | Sheila Killian Adding shareholder value through dividend policy: Evidence from the United Kingdom on tax-based shareholder clienteles Journal of Economic and Financial Sciences taxation dividends clienteles shareholder value United Kingdom |
| title | Adding shareholder value through dividend policy: Evidence from the United Kingdom on tax-based shareholder clienteles |
| title_full | Adding shareholder value through dividend policy: Evidence from the United Kingdom on tax-based shareholder clienteles |
| title_fullStr | Adding shareholder value through dividend policy: Evidence from the United Kingdom on tax-based shareholder clienteles |
| title_full_unstemmed | Adding shareholder value through dividend policy: Evidence from the United Kingdom on tax-based shareholder clienteles |
| title_short | Adding shareholder value through dividend policy: Evidence from the United Kingdom on tax-based shareholder clienteles |
| title_sort | adding shareholder value through dividend policy evidence from the united kingdom on tax based shareholder clienteles |
| topic | taxation dividends clienteles shareholder value United Kingdom |
| url | https://jefjournal.org.za/index.php/jef/article/view/359 |
| work_keys_str_mv | AT sheilakillian addingshareholdervaluethroughdividendpolicyevidencefromtheunitedkingdomontaxbasedshareholderclienteles |