Direct Evidence of Dividend Tax Clienteles

29 Pages Posted: 20 Nov 2006 Last revised: 19 Feb 2014

See all articles by Magnus Dahlquist

Magnus Dahlquist

Stockholm School of Economics; Swedish House of Finance

Göran Robertsson

Swedish House of Finance at Stockholm School of Economics

Kristian Rydqvist

State University of New York at Binghamton - School of Management; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Multiple version iconThere are 2 versions of this paper

Date Written: February 2014

Abstract

We evaluate the dividend tax clientele hypothesis using a data set of all stock portfolios in the market. Consistent with the predictions of Tax-CAPM, we find that tax-neutral investors tilt their stock portfolios towards dividend-paying stocks and earn about 40 basis points higher dividend yield than investment funds that prefer capital gains over dividends. We also document that private corporations, foundations, and partnerships have deviating dividend preferences, and discuss how these portfolio behaviors relate to special tax or charter provisions.

Keywords: Tax-CAPM, stock ownership, institutional investors, private corporations, foundations, partnerships

JEL Classification: G11, G35

Suggested Citation

Dahlquist, Magnus and Robertsson, Göran and Rydqvist, Kristian, Direct Evidence of Dividend Tax Clienteles (February 2014). Available at SSRN: https://ssrn.com/abstract=945675 or http://dx.doi.org/10.2139/ssrn.945675

Magnus Dahlquist

Stockholm School of Economics ( email )

Drottninggatan 98
Stockholm, SE-111 60
Sweden

Swedish House of Finance ( email )

Drottninggatan 98
111 60 Stockholm
Sweden

Göran Robertsson

Swedish House of Finance at Stockholm School of Economics ( email )

Drottninggatan 98
Stockholm, 3 111 60
Sweden
0708993810 (Phone)
167 65 (Fax)

Kristian Rydqvist (Contact Author)

State University of New York at Binghamton - School of Management ( email )

P.O. Box 6015
Binghamton, NY 13902-6015
United States
607-777-2673 (Phone)
607-777-4422 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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