Does a change in dividend tax rates in the U.S. affect equity prices of non-U.S. stocks?

Research output: Contribution to journalArticle


I investigate the link between dividend taxes and stock prices in a global setting. Based on findings from an open-economy after-tax capital asset pricing model, I predict that, when the U.S. cut its dividend tax rate in 2003, stock prices will increase for high-dividend yield foreign firms that are eligible for a U.S. income tax treaty. I examine returns for firms headquartered in treaty countries and find results consistent with this prediction. In further tests, I find that the same relation does not hold for firms in nontreaty countries. My paper is the first to provide direct evidence about whether and how dividend taxes affect equity prices across an integrated global economy.

Original languageEnglish (US)
JournalReview of Accounting Studies
Publication statusPublished - Jan 1 2019



  • Expected stock returns
  • Shareholder dividend taxes
  • Stock prices
  • Tax capitalization

ASJC Scopus subject areas

  • Accounting
  • Business, Management and Accounting(all)

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