preview

Nt1310 Unit 4 Case Study

Satisfactory Essays
Open Document

2. a. I will use quarterly Compusta data.
b. I will estimate both regular and special dividend initiation, and repurchase/
c. We need an exogenous shock to dividend tax rate in order to test how dividend taxation affect divided policy. I will use the 2003 Dividend cut. There are many factors for dividend vs repurchase. In addition to dividend tax, Roni also talked about the signaling role of payout policy, agency problem related to payout policy and behavioral biases related to divided vs, repurchase. Therefore, it is not clear now tax affected divided policy. An exogenous shock to dividend tax rate isolates the effect of tax on payout policy. We assume that dividend tax cut does not change other factors such firm’s agency problem or investor’s

Get Access