Differentiated Dividend Taxation Corporate Governance and Wealth Effect
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| Title | Differentiated Dividend Taxation Corporate Governance and Wealth Effect
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| Author | Wang Guojun and Wang Yuetang |
| Organization | Nanjing University |
| Email | wangyt@nju.edu.cn；wangguojun@nju.edu.cn |
| Key Words | Differentiated Dividend Tax, Corporate Governance, Firm Valuation |
| Abstract | Research in the West shows that dividend tax lowers investor return, therefore increase equity costs. Does this theory apply in China? Using the dividend tax reform in 2007 as an opportunity, we test whether differentiated dividend taxation affect firm valuation. The results suggest: market react positively to stock with low turnover rate and high dividend yield which implies that dividend tax reform increases investor return, therefore decrease equity costs. We find that above results exist only in sub-sample with good corporate governance which suggests that insufficient corporate governance weakens the positive effects of dividend taxation reform. We think that dividend taxation is an important tool to regulate capital market, but the effects of policy implementation depends on dividend yields corporate governance. |
| Serial Number | WP886 |
| Time | 2015-06-12 |
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