Did the 2003 Tax Act reduce the cost of equity capital?

• 成果类型: Article
• 署名作者: Dhaliwal, Dan; Krull, Linda; Li, Oliver Zhen
• 署名单位: University of Arizona; University of Auckland; University of Texas System; University of Texas Austin; University of Notre Dame
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2006.07.001
• 发表日期: 2007
• 关键词: dividend taxes; stock-prices; IMPLIED COST; gains taxes; valuation; return

摘要

The Jobs and Growth Tax Relief Reconciliation Act of 2003 reduced shareholder-level taxes on equity income. If shareholder-level taxation is a component of cost of equity capital, then the cost of equity capital should decrease after the Tax Act. We find that the cost of equity capital decreases by 1.02% and that the decline is smaller for firms largely held by institutional investors to whom the tax rate reduction does not apply. These results suggest that the Tax Act lowered the cost of equity capital and add further evidence to the question of whether taxes impact valuation. (c) 2006 Elsevier B.V. All rights reserved.