Managerial response to the may 2003 dividend tax cut

Published

Journal Article (Review)

We survey 328 financial executives to determine the effects of the May 2003 dividend tax cut. We find that the tax cut led to initiations and dividend increases at some firms. However, executives say that among the factors that affect dividend policy, the tax rate reduction is less important than the stability of future cash flows, cash holdings, and the historic level of dividends. Tax effects have roughly the same importance as attracting institutional investors and the availability of profitable investments. We also find that press releases only occasionally mention the dividend tax cut as the reason for an initiation.

Full Text

Duke Authors

Cited Authors

  • Brav, A; Graham, JR; Harvey, CR; Michaely, R

Published Date

  • December 1, 2008

Published In

Volume / Issue

  • 37 / 4

Start / End Page

  • 611 - 624

International Standard Serial Number (ISSN)

  • 0046-3892

Digital Object Identifier (DOI)

  • 10.1111/j.1755-053X.2008.00027.x

Citation Source

  • Scopus