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Frank Strobel
''The dividend puzzle and tax: a note''
( 2011, Vol. 31 No.3 )
The dividend puzzle, where consumers prefer capital gains to dividends due to differences in taxation, is examined in a two-period general equilibrium model with heterogeneous agents. Stressing the importance of interfirm equity holdings and their tax treatment, different scenarios where dividends are paid to some or all consumers in equilibrium are exposed, giving rise to the potential formation of tax clienteles.
Keywords: dividend puzzle, taxation, interfirm equity, tax clienteles
JEL: G3 - Corporate Finance and Governance: General
Manuscript Received : Aug 05 2010 Manuscript Accepted : Sep 28 2011

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