Dividend taxation in firm valuation: New evidence

@inproceedings{Harris1999DividendTI,
  title={Dividend taxation in firm valuation: New evidence},
  author={Trevor Samuel Harris and Deen Kemsley},
  year={1999}
}
  • Trevor Samuel Harris, Deen Kemsley
  • Published 1999
  • Economics
  • In this paper we develop a residual-income model showing how taxes on dividends affect the relative valuation of retained earnings versus contributed equity, as well as the value of expected future earnings. Tests of predictions from our model for a sample of Compustat firms from 197594 suggest that overall firm value, and the relative valuation weights investors assign to retained earnings, contributed equity, and current earnings, all critically depend on dividend taxes. The findings also… CONTINUE READING

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