Loading...
Shareholder Tax Cuts and Corporate Investment: New Evidence
Xun, Xiong
Xun, Xiong
Citations
Altmetric:
Abstract
This study finds new evidence on how the 2003 shareholder tax cut affects corporate investment by investigating firm innovative behavior. Our findings reveal that the effect of this tax cut depends on the degree of financing constraint faced by a firm. Specifically, we find that financially constrained firms undertake more R&D projects and file more patents after the tax cut than unconstrained firms, whereas unconstrained firms increase dividend payouts and share repurchases. We further find that constrained firms experience a greater decrease in the cost of equity and increase in equity issuances after 2003 than unconstrained firms. This finding suggests that the shareholder tax cut alleviates financial constraints more for previously constrained firms and facilitates access to equity. Overall, these results highlight the role of access to equity financing in mitigating underinvestment in innovation.
Description
These are the slides from a presentation given at 2024 Financial Management Association Annual Conference on 10/18/2024.
Date
2024-10-18
Journal Title
Journal ISSN
Volume Title
Publisher
University of Kansas
Research Projects
Organizational Units
Journal Issue
Keywords
Access to equity financing, Shareholder tax cut, Financial constraints, Corporate Innovation, Investment