The article deals with dividends and their distribution from investors from a theoretical point of view. Some studies try to analyzed the reaction of the market on the dividend announcement and found out the change of dividend policy is associated with abnormal returns around the dividend announcement date. Another researches directly questioned the investors about their dividend preference and beliefs. Investors want the dividend from many reasons (e.g. some of them explain the dividend preference by the existence of transaction cost; investors prefer the dividend today, because there is less risky; the managers have private information about the firm). The most controversial theory of dividend policy was developed by Modigliani and Miller (1961) who demonstrated that in the perfect and complete capital markets the dividend policy is irrelevant and the value of the company is independent of its payout policy. Nevertheless, in the real world the capital markets are imperfect, because of asymmetric information, transaction costs, incomplete contracting possibilities and taxes.
[1] Aharony, J., Swary, I. "Quarterly Dividend And Earnings
Announcements and Stockholders- Returns: An Empirical Analysis,"
Journal of Finance. 1980, Vol. 35, Iss. 1, pp. 1-12.
[2] Baker, H. K., Kolb, R. W. Dividends and Dividend Policy. John Wiley
& Sons. 2009, pp. 552, ISBN 978-0-470-45580-7.
[3] Beblo, M., Beninger, D., Lasiney, F. "Family Tax Splitting: A
Microsimulation of its Potential Labour Supply and Intra-household
Welfare Effects," ZEW: Discussion Paper No. 03-32. 2003.
[4] Bernardi, L., Profeta, P. Tax systems and tax reforms in Europe, New
York: Routledge, 2004, pp. 305, ISBN 0-415-32251-0.
[5] Bhattacharya, S. "Imperfect information, dividend policy and the bird in
the hand fallacy," The Bell Journal of Economics, 1979, Vol. 10, No. 1,
pp. 259-270.
[6] Black, F. "The dividend puzzle," The Journal of Portfolio Management.
1976, no. 2, pp. 5-8.
[7] Bond, S., Chennells, L., "Corporate income taxes and investment: A
comparative study," The Institute of Fiscal Studies (online) 2000. (cit.
2009-12-08), pp. 108. Available:
http://www.ifs.org.uk/docs/bertlesmann.pdf.
[8] Brav, A., Graham J. R., Harvey C. R., Michaely, R. "Payout policy in
the 21st century," Journal of Financial Economics. 2005, Vol. 77. Iss. 3,
pp. 483-527.
[9] Brealey, R. A., Myers, S. C. Principles of Corporate Finance. 7er ed.
Irwin: McGraw-Hill, 2003, pp. 1120, ISBN 0070529086, ISBN 978-
0070529083.
[10] Charest, G. "Dividend Information, Stock Returns and Market
Efficiency," Journal of Financial Economics, 1978, Vol. 6, Iss. 2-3, pp.
297-330.
[11] Dethier, J., John, C. "The Taxation of Capital Income in Hungary from
the Perspective of European Integration," World Bank Policy Research
Working Paper No. 1903, 1998.
[12] Dong, M., Robinson, C., Veld, C. "Why individual investors want
dividends," Journal of Corporate Finance, 2005, Vol. 12, Iss. 1, pp. 121-
158.
[13] Eades, K., Hess, P., Kim, H., E. "Market Rationality and Dividend
Announcements," Journal of Financial Economics, 1985, Vol. 14, Iss. 4,
pp. 581-604.
[14] Easterbrook, F., H. "Two agency-cost explanations of dividends,"
American Economic Review 74, 1984, Vol. 74, No. 4, pp. 650-659.
[15] Euradit International. Les imp├┤ts en Europe 2007. 15th ed. Delmas,
2007, pp. 304, ISBN 10-2247072917.
[16] Fama, E. F., Babiak, H. ÔÇ×Dividend Policy: An Empirical Analysis,"
Journal of the American Statistical Association. 1968, Vol. 63, No. 324,
pp. 1132 -1161.
[17] Fama, E. F., French, K. R. ÔÇ×Disappearing dividends: Changing firm
characteristics or lower propensity to pay?" Journal of Financial
Economics. 2001, vol. 60, iss. 1, pp. 3-43.
[18] Grullon, G, Michaely, R. ÔÇ×Dividends, Share Repurchases, and the
Substitution Hypothesis," The Journal of Finance. 2002, Vol. 57, No. 4,
pp. 1649-1684.
[19] Jensen, M. C. ÔÇ×Agency costs of free cash flow, corporate finance and
takeovers," American Economic Review. 1986, no. 76, pp. 323-329.
[20] Jenter, D. ÔÇ×Lecture of Finance Theory II 15.402," Sloan-School-of-
Management, 2003.
[21] John, K, Williams, J. ÔÇ×Dividends, Dilution, and Taxes: A Signalling
Equilibrium," Journal of Finance.1985, Vol. 40, Iss. 4, pp. 1053-1070.
[22] Kai, L, Xinlei, Z. ÔÇ×Asymmetric Information and Dividend Policy,"
Financial Management. 2008, Vol. 37, No. 4, pp. 673-694.
[23] Kalay, A. ÔÇ×The Ex-dividend Day Behavior of Stock Prices: A Reexamination
of the Clientele Effect," The
[24] Lintner, J. "Distribution of Incomes of Corporations Among Dividens,
Retained Earnings, and," The American Economic Review (online).
1956, Vol. 46, No. 2, (cit. 2010-03-15). Available:
http://www.ecsocman.edu.ru/images/pubs/2007/10/25/0000314521/lintn
er_1956.pdf.
[25] Lundstrum, L. "Testing the Dividend Signaling Hypothesis: Conditional
event study versus residual analysis," Working paper, North Carolina
State University. 2005.
[26] Maditinos, D. I., Sevic, Z., Theriou, N. G., Tsinani, A. V. "Individual
investors\' perceptions towards dividends: the case of Greece,"
International Journal of Monetary Economics and Finance. 2007, Vol. 1,
No. 1, pp. 18-31.
[27] Kinkki, S. "Dividend Puzzle - A Review of," The Finnish Journal of
Business Economics. 2001, no. 1, pp. 58-97.
[28] Miller, M, Rock, K. "Dividend Policy under Asymmetric Information,"
Journal of Finance. 1985, Vol. 40, No. 4, pp. 1031-1051.
[29] Miller, M, Modigliani, F. "Dividend Policy, Growth, and the Valuation
of Shares," Journal of Business. 1961, Vol. 34, pp. 411.
[30] Monaco, C. L-imposta sulle società nell-ordinamento francese.
University of Pavia : Department of Economia Pubblica e Territoriale,
1999.
[31] Muller, J. The Netherlands in international tax planning. 2nd edition.
(s.l.): IBFD, 2007, pp. 396. ISBN 978-90-8722-024-2.
[32] Shefrin, H. M., Statman, M. "Explaining investor preference for cash
dividends," Journal of Financial Economics. 1984, Vol. 13, Iss. 2, pp.
253-282.
[1] Aharony, J., Swary, I. "Quarterly Dividend And Earnings
Announcements and Stockholders- Returns: An Empirical Analysis,"
Journal of Finance. 1980, Vol. 35, Iss. 1, pp. 1-12.
[2] Baker, H. K., Kolb, R. W. Dividends and Dividend Policy. John Wiley
& Sons. 2009, pp. 552, ISBN 978-0-470-45580-7.
[3] Beblo, M., Beninger, D., Lasiney, F. "Family Tax Splitting: A
Microsimulation of its Potential Labour Supply and Intra-household
Welfare Effects," ZEW: Discussion Paper No. 03-32. 2003.
[4] Bernardi, L., Profeta, P. Tax systems and tax reforms in Europe, New
York: Routledge, 2004, pp. 305, ISBN 0-415-32251-0.
[5] Bhattacharya, S. "Imperfect information, dividend policy and the bird in
the hand fallacy," The Bell Journal of Economics, 1979, Vol. 10, No. 1,
pp. 259-270.
[6] Black, F. "The dividend puzzle," The Journal of Portfolio Management.
1976, no. 2, pp. 5-8.
[7] Bond, S., Chennells, L., "Corporate income taxes and investment: A
comparative study," The Institute of Fiscal Studies (online) 2000. (cit.
2009-12-08), pp. 108. Available:
http://www.ifs.org.uk/docs/bertlesmann.pdf.
[8] Brav, A., Graham J. R., Harvey C. R., Michaely, R. "Payout policy in
the 21st century," Journal of Financial Economics. 2005, Vol. 77. Iss. 3,
pp. 483-527.
[9] Brealey, R. A., Myers, S. C. Principles of Corporate Finance. 7er ed.
Irwin: McGraw-Hill, 2003, pp. 1120, ISBN 0070529086, ISBN 978-
0070529083.
[10] Charest, G. "Dividend Information, Stock Returns and Market
Efficiency," Journal of Financial Economics, 1978, Vol. 6, Iss. 2-3, pp.
297-330.
[11] Dethier, J., John, C. "The Taxation of Capital Income in Hungary from
the Perspective of European Integration," World Bank Policy Research
Working Paper No. 1903, 1998.
[12] Dong, M., Robinson, C., Veld, C. "Why individual investors want
dividends," Journal of Corporate Finance, 2005, Vol. 12, Iss. 1, pp. 121-
158.
[13] Eades, K., Hess, P., Kim, H., E. "Market Rationality and Dividend
Announcements," Journal of Financial Economics, 1985, Vol. 14, Iss. 4,
pp. 581-604.
[14] Easterbrook, F., H. "Two agency-cost explanations of dividends,"
American Economic Review 74, 1984, Vol. 74, No. 4, pp. 650-659.
[15] Euradit International. Les imp├┤ts en Europe 2007. 15th ed. Delmas,
2007, pp. 304, ISBN 10-2247072917.
[16] Fama, E. F., Babiak, H. ÔÇ×Dividend Policy: An Empirical Analysis,"
Journal of the American Statistical Association. 1968, Vol. 63, No. 324,
pp. 1132 -1161.
[17] Fama, E. F., French, K. R. ÔÇ×Disappearing dividends: Changing firm
characteristics or lower propensity to pay?" Journal of Financial
Economics. 2001, vol. 60, iss. 1, pp. 3-43.
[18] Grullon, G, Michaely, R. ÔÇ×Dividends, Share Repurchases, and the
Substitution Hypothesis," The Journal of Finance. 2002, Vol. 57, No. 4,
pp. 1649-1684.
[19] Jensen, M. C. ÔÇ×Agency costs of free cash flow, corporate finance and
takeovers," American Economic Review. 1986, no. 76, pp. 323-329.
[20] Jenter, D. ÔÇ×Lecture of Finance Theory II 15.402," Sloan-School-of-
Management, 2003.
[21] John, K, Williams, J. ÔÇ×Dividends, Dilution, and Taxes: A Signalling
Equilibrium," Journal of Finance.1985, Vol. 40, Iss. 4, pp. 1053-1070.
[22] Kai, L, Xinlei, Z. ÔÇ×Asymmetric Information and Dividend Policy,"
Financial Management. 2008, Vol. 37, No. 4, pp. 673-694.
[23] Kalay, A. ÔÇ×The Ex-dividend Day Behavior of Stock Prices: A Reexamination
of the Clientele Effect," The
[24] Lintner, J. "Distribution of Incomes of Corporations Among Dividens,
Retained Earnings, and," The American Economic Review (online).
1956, Vol. 46, No. 2, (cit. 2010-03-15). Available:
http://www.ecsocman.edu.ru/images/pubs/2007/10/25/0000314521/lintn
er_1956.pdf.
[25] Lundstrum, L. "Testing the Dividend Signaling Hypothesis: Conditional
event study versus residual analysis," Working paper, North Carolina
State University. 2005.
[26] Maditinos, D. I., Sevic, Z., Theriou, N. G., Tsinani, A. V. "Individual
investors\' perceptions towards dividends: the case of Greece,"
International Journal of Monetary Economics and Finance. 2007, Vol. 1,
No. 1, pp. 18-31.
[27] Kinkki, S. "Dividend Puzzle - A Review of," The Finnish Journal of
Business Economics. 2001, no. 1, pp. 58-97.
[28] Miller, M, Rock, K. "Dividend Policy under Asymmetric Information,"
Journal of Finance. 1985, Vol. 40, No. 4, pp. 1031-1051.
[29] Miller, M, Modigliani, F. "Dividend Policy, Growth, and the Valuation
of Shares," Journal of Business. 1961, Vol. 34, pp. 411.
[30] Monaco, C. L-imposta sulle società nell-ordinamento francese.
University of Pavia : Department of Economia Pubblica e Territoriale,
1999.
[31] Muller, J. The Netherlands in international tax planning. 2nd edition.
(s.l.): IBFD, 2007, pp. 396. ISBN 978-90-8722-024-2.
[32] Shefrin, H. M., Statman, M. "Explaining investor preference for cash
dividends," Journal of Financial Economics. 1984, Vol. 13, Iss. 2, pp.
253-282.
@article{"International Journal of Business, Human and Social Sciences:55049", author = "Margareta Ilkova and Petr Teply", title = "Theoretical Background of Dividend Taxation", abstract = "The article deals with dividends and their distribution from investors from a theoretical point of view. Some studies try to analyzed the reaction of the market on the dividend announcement and found out the change of dividend policy is associated with abnormal returns around the dividend announcement date. Another researches directly questioned the investors about their dividend preference and beliefs. Investors want the dividend from many reasons (e.g. some of them explain the dividend preference by the existence of transaction cost; investors prefer the dividend today, because there is less risky; the managers have private information about the firm). The most controversial theory of dividend policy was developed by Modigliani and Miller (1961) who demonstrated that in the perfect and complete capital markets the dividend policy is irrelevant and the value of the company is independent of its payout policy. Nevertheless, in the real world the capital markets are imperfect, because of asymmetric information, transaction costs, incomplete contracting possibilities and taxes.
", keywords = "dividend distribution, taxation, payout policy,
investor, Modigliani and Miller theorem", volume = "5", number = "1", pages = "31-5", }
