search query: @indexterm Dividend policy / total: 136
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| Author: | Ang, J.S. Blackwell, D.W. Megginson, W.L. |
| Title: | The effect of taxes on the relative valuation valuation of dividends and capital gains : evidence from dual-class british investment trusts |
| Journal: | Journal of Finance
1991 : MAR, VOL. 46:1, p. 383-399 |
| Index terms: | CAPITAL GAINS TAX DIVIDEND POLICY INVESTMENT TRUSTS UNITED KINGDOM |
| Language: | eng |
| Abstract: | Evidence is provided that taxes affect equity valuation by studying British investment trusts having otherwise identical classes of cash- and stock-dividend-paying shares outstanding. A period 1969-1982 was studied, in which there were two dramatic changes in tax policy. It is found that stock-dividend shares, which are convertible into cash-dividend shares, sell at premiums when the tax system favors capital gains and at discounts when the tax advantage of capital gains is reduced. After the 1975 elimination of the tax advantage to stock-dividend shares, it is observed that investors convert virtually all stock-dividend shares into cash-dividend shares. |
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