Dividend Tax Cuts and Regulated Firms' Stock Prices

We examine the impact of the Jobs and Growth Tax Relief Reconciliation Act of 2003 on regulated firms' stock prices. Using a sample consisting of utility and financial firms, we find companies with higher dividend payments have greater abnormal returns than those with lower/no dividend payouts....

Full description

Saved in:
Bibliographic Details
Published in:Quarterly journal of finance and accounting 2009-09, Vol.48 (4), p.53-78
Main Authors: Dickens, Ross N., Hunsader, Kenneth J.
Format: Article
Language:English
Subjects:
Bank stocks
Banks
Business enterprises
Cash
Dividends
Free cash flow
Industrial regulation
Laws, regulations and rules
Modeling
Musical agency
Ratios
Stock prices
Taxation
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:We examine the impact of the Jobs and Growth Tax Relief Reconciliation Act of 2003 on regulated firms' stock prices. Using a sample consisting of utility and financial firms, we find companies with higher dividend payments have greater abnormal returns than those with lower/no dividend payouts. We find considerable support for the static tax-rate effect and general, but not consistent, support for agency theory's excess cash hypothesis. Result variations across regulated firms' SIC codes provide support that researchers should control for or exclude regulated firms in empirical studies.
ISSN:1939-8123