Insider ownership and dividend policy in an imputation tax environment

Balasingham Balachandran, Arifur Khan, Paul Mather, Michael Theobald

Research output: Contribution to journalArticleResearchpeer-review

24 Citations (Scopus)

Abstract

Firms are more likely to pay dividends with higher payout ratios in an imputation environment. The effects of profitability and earned/contributed capital mix on the decision to pay dividends and dividend payout are weaker for firms following imputation tax system than traditional tax system. Insider ownership is positively related to the decision to pay dividends and dividend payout and this effect does not vary between traditional and imputation tax systems. Firms with higher foreign institutional ownership are less likely to pay dividends and have lower payout ratios. The study demonstrates the significance of the imputation tax system upon dividend policy.

Original languageEnglish
Pages (from-to)153-167
Number of pages15
JournalJournal of Corporate Finance
Volume54
DOIs
Publication statusPublished - Feb 2019
Externally publishedYes

Keywords

  • Agency costs
  • Franked dividend
  • Imputation tax system
  • Insider ownership
  • Institutional ownership
  • Unfranked dividend

Cite this