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Income Taxation Regulation And Companies’ Behaviour: Is The Romanian Companies’ Dividend Policy Influenced By The Changes In Income Taxation?

Author

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  • Dragota, Mihaela

    (Department of Finance, Academy of Economic Studies, Bucharest, Romania)

  • Dragota, Victor

    (Department of Finance, Academy of Economic Studies, Bucharest, Romania)

  • Tatu, Lucian

    (Department of Finance, Academy of Economic Studies, Bucharest)

  • Tatu, Delia

    (Department of Economics, Academy of Economic Studies, Bucharest)

Abstract

This paper analyzes the dividend payout by Romanian companies listed on the Bucharest Stock Exchange in connection with the changes in corporate taxes. If the tax burden on corporate gross incomes is increasing, the companies’ management can follow two reasons in deciding the dividend payout: to allocate more for investments, or to increase the dividend ratio. Each of these decisions can be argued based on Corporate Finance principles, depending on the management objectives. This paper found no significant correlation between the dividend policy and the corporate tax burden. However, the dividend payout reacted when the regulations related to the tax treatment of incomes were changed in 2005. Moreover, the dividend policy seems to be sensitive to the ownership structure, which can be explained by the impact of some agency problems.

Suggested Citation

  • Dragota, Mihaela & Dragota, Victor & Tatu, Lucian & Tatu, Delia, 2009. "Income Taxation Regulation And Companies’ Behaviour: Is The Romanian Companies’ Dividend Policy Influenced By The Changes In Income Taxation?," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 6(1), pages 76-93, March.
    • Handle: RePEc:rjr:romjef:v:6:y:2009:i:1:p:76-93
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    References listed on IDEAS

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    Cited by:

    1. Hanaan Yaseen & Ruxandra Trifan, 2019. "The Impact of Dividend Events on Stock Returns: Findings on Companies Listed on the Bucharest Stock Exchange," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 11(2), pages 59-78, December.
    2. Hanaan Yaseen, 2021. "Does Social Progress Explain the Dividend Payout Decision?," Prague Economic Papers, Prague University of Economics and Business, vol. 2021(1), pages 90-114.
    3. Hanaan Yaseen, . "Does Social Progress Explain the Dividend Payout Decision?," Prague Economic Papers, Prague University of Economics and Business, vol. 0.
    4. repec:rfb:journl:v:10:y:2018:i:2:p:0077-094 is not listed on IDEAS
    5. Hanaan Yaseen, 2018. "Dividend policy and socio-cultural factors: some preliminary findings," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 10(2), pages 077-094, December.
    6. Stela JAKOVA, 2017. "Impact of Dividend Taxation Changing on Dividend Policy of Romanian Companies Listed on Stock Market," Romanian Statistical Review, Romanian Statistical Review, vol. 65(3), pages 81-92, September.

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    More about this item

    Keywords

    dividend payout; taxation; agency problem; emergent markets;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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