Managerial ability and the shareholder tax sensitivity of dividends

Jenny Xinjiao Guan, Oliver Zhen Li, Jiameng Ma

Research output: Contribution to journalArticleResearchpeer-review

4 Citations (Scopus)

Abstract

We examine the impact of managerial ability on the shareholder tax sensitivity of dividends. We find that managerial ability increases the sensitivity of dividends to the dividend tax penalty. In addition, the positive association between managerial ability and the shareholder tax sensitivity of dividends decreases in institutional ownership. Further, managerial ability increases the shareholder tax sensitivity of the substitution of dividends with share repurchases. Finally, evidence from tax reforms reveals that high ability managers are more responsive to a reduction in dividend tax penalty than to an increase. We conclude that managerial ability influences the formation of tax-efficient dividend policies.

Original languageEnglish
Pages (from-to)335-364
Number of pages30
JournalJournal of Financial and Quantitative Analysis
Volume53
Issue number1
DOIs
Publication statusPublished - 1 Feb 2018
Externally publishedYes

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