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September 10, 2025Corporate Governance An International ReviewOpen Access

Passing the Shareholders' Tax Burden to the Corporation: Evidence From Inheritance and Gift Tax

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Authors

HNHyun Jong NaTJTaejin Jung

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Overview

Analysis reveals how inheritance and gift taxes affect dividend policies in firms, suggesting significant implications for corporate governance.

Key Points

  • Firms significantly increase dividend payouts following shareholder tax events, revealing a direct impact of tax burdens on financial decisions.
  • The increase in dividends is strongly correlated with the size of the controlling shareholders' tax burden in South Korea.
  • In firms with strong governance, such as board independence, the response to tax changes is less pronounced.
  • Negative stock market reactions follow higher dividend announcements, highlighting potential economic consequences of increased payouts.

Cite This Study

Na et al. (2025) studied this question.

synapsesocial.com/papers/68c1bd4254b1d3bfb60ee99ehttps://doi.org/10.1111/corg.12661
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