A new look at the 'old view': Endogenous discounting, taxation, and corporate financial decisions.

摘要

The theoretical debate over the effect of dividend taxation on corporate decisions is long-running and unsettled, and was central to the debate and passage of the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA). It is a critical issue again as the expiration of JGTRRA tax rates looms at the end of 2012.;This dissertation proposes an enhanced "old view" theoretical model of dividend taxation, using endogenous discounting methodology to relate dividend policy, taxes, and investment. In addition to the standard old view condition for optimal investment, an Euler equation for optimal dividend policy is derived. Optimal dividends and investment are both shown to vary negatively with dividend tax rates, ceteris paribus.;Predictions from theory are tested using a pooled panel of U.S. firms over 1994-2009, and existing empirical studies of the effects of dividend tax changes on firm decisions are improved upon by use of a Tobit corner solution model to address the "excess zeroes" problem of large numbers of non-dividend paying firms and by controlling for endogenous firm investment. Results are consistent with old view predictions of a positive effect of dividend tax cuts on both payouts and investment, suggesting that the expiration of JGTRRA could be expected to reduce payouts and investment. Estimates of the effects of JGTRRA on dividend payouts relative to assets are statistically significant and large compared to average payouts since 1994, and estimates of the effect on firm investment suggest an increase of about 5-6 percent from pre-JGTRRA levels, ceteris paribus.