New Evidence of the Impact of Dividend Taxation and on the Identity of the Marginal Investor.
This paper examines the impact of a major change in dividend taxation introduced in the UK in July 1997. The reform was structured in such a way that the immediate impact fell almost entirely on the largest investor class in the UK, namely pension funds. We analyse the behaviour of share prices arou...
| Príomhchruthaitheoirí: | , |
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| Formáid: | Working paper |
| Teanga: | English |
| Foilsithe / Cruthaithe: |
Department of Economics (University of Oxford)
2000
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| _version_ | 1826273638102335488 |
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| author | Bell, L Jenkinson, T |
| author_facet | Bell, L Jenkinson, T |
| author_sort | Bell, L |
| collection | OXFORD |
| description | This paper examines the impact of a major change in dividend taxation introduced in the UK in July 1997. The reform was structured in such a way that the immediate impact fell almost entirely on the largest investor class in the UK, namely pension funds. We analyse the behaviour of share prices around the ex-dividend day both before and after the reform to test clientele effects and the impact of taxation on the valuation of companies. We find strong clientele effects in the UK, which are consistent with the distortions introduced by the tax system (before the reform dividend income was tax-advantaged in the UK). We also find significant changes in the valuation of dividend income after the reform, in particular for high-yielding companies. These results provide strong support for the hypothesis that taxation affects the valuation of companies, and that pension funds were the effective marginal investors for high-yielding companies. |
| first_indexed | 2024-03-06T22:31:15Z |
| format | Working paper |
| id | oxford-uuid:585a0ffc-e4f9-44e8-9c8f-5d1c7d2f6de1 |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-03-06T22:31:15Z |
| publishDate | 2000 |
| publisher | Department of Economics (University of Oxford) |
| record_format | dspace |
| spelling | oxford-uuid:585a0ffc-e4f9-44e8-9c8f-5d1c7d2f6de12022-03-26T17:02:47ZNew Evidence of the Impact of Dividend Taxation and on the Identity of the Marginal Investor.Working paperhttp://purl.org/coar/resource_type/c_8042uuid:585a0ffc-e4f9-44e8-9c8f-5d1c7d2f6de1EnglishOxford University Research Archive - ValetDepartment of Economics (University of Oxford)2000Bell, LJenkinson, TThis paper examines the impact of a major change in dividend taxation introduced in the UK in July 1997. The reform was structured in such a way that the immediate impact fell almost entirely on the largest investor class in the UK, namely pension funds. We analyse the behaviour of share prices around the ex-dividend day both before and after the reform to test clientele effects and the impact of taxation on the valuation of companies. We find strong clientele effects in the UK, which are consistent with the distortions introduced by the tax system (before the reform dividend income was tax-advantaged in the UK). We also find significant changes in the valuation of dividend income after the reform, in particular for high-yielding companies. These results provide strong support for the hypothesis that taxation affects the valuation of companies, and that pension funds were the effective marginal investors for high-yielding companies. |
| spellingShingle | Bell, L Jenkinson, T New Evidence of the Impact of Dividend Taxation and on the Identity of the Marginal Investor. |
| title | New Evidence of the Impact of Dividend Taxation and on the Identity of the Marginal Investor. |
| title_full | New Evidence of the Impact of Dividend Taxation and on the Identity of the Marginal Investor. |
| title_fullStr | New Evidence of the Impact of Dividend Taxation and on the Identity of the Marginal Investor. |
| title_full_unstemmed | New Evidence of the Impact of Dividend Taxation and on the Identity of the Marginal Investor. |
| title_short | New Evidence of the Impact of Dividend Taxation and on the Identity of the Marginal Investor. |
| title_sort | new evidence of the impact of dividend taxation and on the identity of the marginal investor |
| work_keys_str_mv | AT belll newevidenceoftheimpactofdividendtaxationandontheidentityofthemarginalinvestor AT jenkinsont newevidenceoftheimpactofdividendtaxationandontheidentityofthemarginalinvestor |