Dividend Taxes and Corporate Behavior: Evidence from the 2003 Dividend Tax Cut

Apr 18, 2026

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Uses the 2003 U.S. individual dividend tax cut to identify how dividend taxation affects corporate payout behavior. Documents a 20% rise in dividend payments by nonfinancial, nonutility public firms after the reform, including more firms initiating or increasing regular dividends. Evidence from nontaxable institutional ownership and heterogeneous firm incentives supports a causal tax effect. Principal-agent considerations are suggested as an important channel.

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Dividend Taxes and Corporate Behavior: Evidence from the 2003 Dividend Tax Cut

Apr 18, 2026

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