Fundamentals of shareholder tax capitalization

We investigate how shareholder-level taxes are capitalized into stock prices using a model that incorporates the investment and payout decisions of a firm and the investment alternatives available to investors. Shareholder taxes affect stock prices both indirectly, via the effect of taxes on corpora...

Full description

Saved in:
Bibliographic Details
Published in:Journal of accounting & economics 2006-12, Vol.42 (3), p.371-383
Main Authors: Guenther, David A., Sansing, Richard
Format: Article
Language:English
Subjects:
Capital
Capitalization
Clienteles
Dividend tax capitalization
Investments
Investors
Stock prices
Stock returns
Stockholders
Studies
Tax rates
Taxes
Tobin's q
Valuation
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
cited_by cdi_FETCH-LOGICAL-c496t-f825d38ccb1d3042d42ec0e5e9cd5f76e8511bfd98586d99cb0c468bba9d90393
cites cdi_FETCH-LOGICAL-c496t-f825d38ccb1d3042d42ec0e5e9cd5f76e8511bfd98586d99cb0c468bba9d90393
container_end_page 383
container_issue 3
container_start_page 371
container_title Journal of accounting & economics
container_volume 42
creator Guenther, David A.
Sansing, Richard
description We investigate how shareholder-level taxes are capitalized into stock prices using a model that incorporates the investment and payout decisions of a firm and the investment alternatives available to investors. Shareholder taxes affect stock prices both indirectly, via the effect of taxes on corporate investment decisions, and directly, by reducing both the mean and variance of after-tax returns. In our model, tax capitalization is not eliminated by the presence of tax-exempt investors, does not depend on whether equity is composed of contributed capital or retained earnings, and does not depend on the tax rate faced by a hypothetical marginal investor.
doi_str_mv 10.1016/j.jacceco.2006.03.005
format article
fullrecord <record><control><sourceid>proquest_cross</sourceid><recordid>TN_cdi_proquest_miscellaneous_36505198</recordid><sourceformat>XML</sourceformat><sourcesystem>PC</sourcesystem><els_id>S0165410106000425</els_id><sourcerecordid>36505198</sourcerecordid><originalsourceid>FETCH-LOGICAL-c496t-f825d38ccb1d3042d42ec0e5e9cd5f76e8511bfd98586d99cb0c468bba9d90393</originalsourceid><addsrcrecordid>eNqFkE9v1DAQxa0KJJbCR0BaceCWMI7jrH1CqKJ_UCUu5Ww544nW0W4c7GxF--k726164MLheQ7-vefxE-KThFqC7L6O9egRCVPdAHQ1qBpAn4mVNBtbSWvgjVgxp6uW8XfifSkjALSNgZWoLw9T8HuaFr8r6zSsy9Zn2qZdoLxe_N81-jnyXXz0S0zTB_F2YJA-vsxz8fvyx93FdXX76-rm4vttha3tlmowjQ7KIPYyKH4ptA0hkCaLQQ-bjoyWsh-CNdp0wVrsAdvO9L23wYKy6lx8OeXOOf05UFncPhak3c5PlA7FqU6D5q8x-PkfcEyHPPFurpEKNGzkEdInCHMqJdPg5hz3Pj84Ce5YoRvdS4XuWKED5bhC9v08-TLNhK8mIho9s5O7d8q3DR8PrGen8pGlWPNxbqRTRrntsuewb6cw4t7uI2VXMNKEFGImXFxI8T_rPAH9ZJTV</addsrcrecordid><sourcetype>Aggregation Database</sourcetype><iscdi>true</iscdi><recordtype>article</recordtype><pqid>213050718</pqid></control><display><type>article</type><title>Fundamentals of shareholder tax capitalization</title><source>International Bibliography of the Social Sciences (IBSS)</source><source>Elsevier:Jisc Collections:Elsevier Read and Publish Agreement 2022-2024:Freedom Collection (Reading list)</source><creator>Guenther, David A. ; Sansing, Richard</creator><creatorcontrib>Guenther, David A. ; Sansing, Richard</creatorcontrib><description>We investigate how shareholder-level taxes are capitalized into stock prices using a model that incorporates the investment and payout decisions of a firm and the investment alternatives available to investors. Shareholder taxes affect stock prices both indirectly, via the effect of taxes on corporate investment decisions, and directly, by reducing both the mean and variance of after-tax returns. In our model, tax capitalization is not eliminated by the presence of tax-exempt investors, does not depend on whether equity is composed of contributed capital or retained earnings, and does not depend on the tax rate faced by a hypothetical marginal investor.</description><identifier>ISSN: 0165-4101</identifier><identifier>EISSN: 1879-1980</identifier><identifier>DOI: 10.1016/j.jacceco.2006.03.005</identifier><identifier>CODEN: JAECDS</identifier><language>eng</language><publisher>Amsterdam: Elsevier B.V</publisher><subject>Capital ; Capitalization ; Clienteles ; Dividend tax capitalization ; Investments ; Investors ; Stock prices ; Stock returns ; Stockholders ; Studies ; Tax rates ; Taxes ; Tobin's q ; Valuation</subject><ispartof>Journal of accounting &amp; economics, 2006-12, Vol.42 (3), p.371-383</ispartof><rights>2006 Elsevier B.V.</rights><rights>Copyright Elsevier Sequoia S.A. Dec 2006</rights><lds50>peer_reviewed</lds50><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c496t-f825d38ccb1d3042d42ec0e5e9cd5f76e8511bfd98586d99cb0c468bba9d90393</citedby><cites>FETCH-LOGICAL-c496t-f825d38ccb1d3042d42ec0e5e9cd5f76e8511bfd98586d99cb0c468bba9d90393</cites></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><link.rule.ids>314,780,784,27924,27925,33223,33224</link.rule.ids><backlink>$$Uhttp://econpapers.repec.org/article/eeejaecon/v_3a42_3ay_3a2006_3ai_3a3_3ap_3a371-383.htm$$DView record in RePEc$$Hfree_for_read</backlink></links><search><creatorcontrib>Guenther, David A.</creatorcontrib><creatorcontrib>Sansing, Richard</creatorcontrib><title>Fundamentals of shareholder tax capitalization</title><title>Journal of accounting &amp; economics</title><description>We investigate how shareholder-level taxes are capitalized into stock prices using a model that incorporates the investment and payout decisions of a firm and the investment alternatives available to investors. Shareholder taxes affect stock prices both indirectly, via the effect of taxes on corporate investment decisions, and directly, by reducing both the mean and variance of after-tax returns. In our model, tax capitalization is not eliminated by the presence of tax-exempt investors, does not depend on whether equity is composed of contributed capital or retained earnings, and does not depend on the tax rate faced by a hypothetical marginal investor.</description><subject>Capital</subject><subject>Capitalization</subject><subject>Clienteles</subject><subject>Dividend tax capitalization</subject><subject>Investments</subject><subject>Investors</subject><subject>Stock prices</subject><subject>Stock returns</subject><subject>Stockholders</subject><subject>Studies</subject><subject>Tax rates</subject><subject>Taxes</subject><subject>Tobin's q</subject><subject>Valuation</subject><issn>0165-4101</issn><issn>1879-1980</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2006</creationdate><recordtype>article</recordtype><sourceid>8BJ</sourceid><recordid>eNqFkE9v1DAQxa0KJJbCR0BaceCWMI7jrH1CqKJ_UCUu5Ww544nW0W4c7GxF--k726164MLheQ7-vefxE-KThFqC7L6O9egRCVPdAHQ1qBpAn4mVNBtbSWvgjVgxp6uW8XfifSkjALSNgZWoLw9T8HuaFr8r6zSsy9Zn2qZdoLxe_N81-jnyXXz0S0zTB_F2YJA-vsxz8fvyx93FdXX76-rm4vttha3tlmowjQ7KIPYyKH4ptA0hkCaLQQ-bjoyWsh-CNdp0wVrsAdvO9L23wYKy6lx8OeXOOf05UFncPhak3c5PlA7FqU6D5q8x-PkfcEyHPPFurpEKNGzkEdInCHMqJdPg5hz3Pj84Ce5YoRvdS4XuWKED5bhC9v08-TLNhK8mIho9s5O7d8q3DR8PrGen8pGlWPNxbqRTRrntsuewb6cw4t7uI2VXMNKEFGImXFxI8T_rPAH9ZJTV</recordid><startdate>20061201</startdate><enddate>20061201</enddate><creator>Guenther, David A.</creator><creator>Sansing, Richard</creator><general>Elsevier B.V</general><general>Elsevier</general><general>Elsevier Sequoia S.A</general><scope>DKI</scope><scope>X2L</scope><scope>AAYXX</scope><scope>CITATION</scope><scope>8BJ</scope><scope>FQK</scope><scope>JBE</scope></search><sort><creationdate>20061201</creationdate><title>Fundamentals of shareholder tax capitalization</title><author>Guenther, David A. ; Sansing, Richard</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c496t-f825d38ccb1d3042d42ec0e5e9cd5f76e8511bfd98586d99cb0c468bba9d90393</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2006</creationdate><topic>Capital</topic><topic>Capitalization</topic><topic>Clienteles</topic><topic>Dividend tax capitalization</topic><topic>Investments</topic><topic>Investors</topic><topic>Stock prices</topic><topic>Stock returns</topic><topic>Stockholders</topic><topic>Studies</topic><topic>Tax rates</topic><topic>Taxes</topic><topic>Tobin's q</topic><topic>Valuation</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Guenther, David A.</creatorcontrib><creatorcontrib>Sansing, Richard</creatorcontrib><collection>RePEc IDEAS</collection><collection>RePEc</collection><collection>CrossRef</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>International Bibliography of the Social Sciences</collection><collection>International Bibliography of the Social Sciences</collection><jtitle>Journal of accounting &amp; economics</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Guenther, David A.</au><au>Sansing, Richard</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Fundamentals of shareholder tax capitalization</atitle><jtitle>Journal of accounting &amp; economics</jtitle><date>2006-12-01</date><risdate>2006</risdate><volume>42</volume><issue>3</issue><spage>371</spage><epage>383</epage><pages>371-383</pages><issn>0165-4101</issn><eissn>1879-1980</eissn><coden>JAECDS</coden><abstract>We investigate how shareholder-level taxes are capitalized into stock prices using a model that incorporates the investment and payout decisions of a firm and the investment alternatives available to investors. Shareholder taxes affect stock prices both indirectly, via the effect of taxes on corporate investment decisions, and directly, by reducing both the mean and variance of after-tax returns. In our model, tax capitalization is not eliminated by the presence of tax-exempt investors, does not depend on whether equity is composed of contributed capital or retained earnings, and does not depend on the tax rate faced by a hypothetical marginal investor.</abstract><cop>Amsterdam</cop><pub>Elsevier B.V</pub><doi>10.1016/j.jacceco.2006.03.005</doi><tpages>13</tpages></addata></record>
fulltext fulltext
identifier ISSN: 0165-4101
ispartof Journal of accounting & economics, 2006-12, Vol.42 (3), p.371-383
issn 0165-4101
1879-1980
language eng
recordid cdi_proquest_miscellaneous_36505198
source International Bibliography of the Social Sciences (IBSS); Elsevier:Jisc Collections:Elsevier Read and Publish Agreement 2022-2024:Freedom Collection (Reading list)
subjects Capital
Capitalization
Clienteles
Dividend tax capitalization
Investments
Investors
Stock prices
Stock returns
Stockholders
Studies
Tax rates
Taxes
Tobin's q
Valuation
title Fundamentals of shareholder tax capitalization
url http://sfxeu10.hosted.exlibrisgroup.com/loughborough?ctx_ver=Z39.88-2004&ctx_enc=info:ofi/enc:UTF-8&ctx_tim=2024-12-26T20%3A07%3A08IST&url_ver=Z39.88-2004&url_ctx_fmt=infofi/fmt:kev:mtx:ctx&rfr_id=info:sid/primo.exlibrisgroup.com:primo3-Article-proquest_cross&rft_val_fmt=info:ofi/fmt:kev:mtx:journal&rft.genre=article&rft.atitle=Fundamentals%20of%20shareholder%20tax%20capitalization&rft.jtitle=Journal%20of%20accounting%20&%20economics&rft.au=Guenther,%20David%20A.&rft.date=2006-12-01&rft.volume=42&rft.issue=3&rft.spage=371&rft.epage=383&rft.pages=371-383&rft.issn=0165-4101&rft.eissn=1879-1980&rft.coden=JAECDS&rft_id=info:doi/10.1016/j.jacceco.2006.03.005&rft_dat=%3Cproquest_cross%3E36505198%3C/proquest_cross%3E%3Cgrp_id%3Ecdi_FETCH-LOGICAL-c496t-f825d38ccb1d3042d42ec0e5e9cd5f76e8511bfd98586d99cb0c468bba9d90393%3C/grp_id%3E%3Coa%3E%3C/oa%3E%3Curl%3E%3C/url%3E&rft_id=info:oai/&rft_pqid=213050718&rft_id=info:pmid/&rfr_iscdi=true