Payout taxes and the allocation of investment
By: Bo Becker, Marcus Jacob, Martin Jacob
Contributors: Jacob, Marcus; Jacob, Martin; National Bureau of Economic Research
Series: NBER working paper series -- working paper 17481; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 17481.
Publisher: National Bureau of Economic Research
Published: 2011
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "When corporate payout is taxed, internal equity (retained earnings) is cheaper than external equity (share issues).  High taxes will favor firms who can finance internally.  If there are no perfect substitutes for equity finance, payout taxes may thus change the investment behavior of firms.  Using an international panel with many changes in payout taxes, we show that this prediction holds well.  Payout taxes have a large impact on the dynamics of corporate investment and growth.  Investment is "locked in" in profitable firms when payout is heavily taxed.  Thus, apart from any aggregate effects, payout taxes change the allocation of capital"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 12/15/2011.

Includes bibliographical references.

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