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The relationship between investor tax preferences and the payout methods of JSE listed companies

South African Journal of Economic and Management Sciences, 2022, Vol.25 (1), p.1-11 [Peer Reviewed Journal]

COPYRIGHT 2022 African Online Scientific Information Systems (Pty) Ltd t/a AOSIS ;2022. This work is published under https://creativecommons.org/licenses/by/4.0/ (the “License”). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License. ;This work is licensed under a Creative Commons Attribution 4.0 International License. ;ISSN: 1015-8812 ;ISSN: 2222-3436 ;EISSN: 2222-3436 ;DOI: 10.4102/sajems.v25i1.4534

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  • Title:
    The relationship between investor tax preferences and the payout methods of JSE listed companies
  • Author: Nel, Rudie ; Wesson, Nicolene ; Steenkamp, Lee-Ann
  • Subjects: African literature ; Business ; Business, Finance ; Capital distributions ; Capital gains ; Capital gains tax ; Communication ; Developing countries ; Dividends ; Economics ; Emerging markets ; Investments ; investor tax preference ; LDCs ; Literature reviews ; Management ; Methods ; payout methods ; Preferences ; Public Administration ; Tax law ; Tax policy ; tax preference ; tax preference parameters ; Tax rates ; Tax reform ; Taxation ; taxes and tax clienteles
  • Is Part Of: South African Journal of Economic and Management Sciences, 2022, Vol.25 (1), p.1-11
  • Description: Background Investor tax preference parameters have been included as an explanatory variable for changes in payout methods in developed countries. There is, however, a lack of research in this area in developing countries. Tax reform in South Africa – comprising a change in the tax regime and successive increases in tax rates – offers a unique setting to examine investor tax preference parameters as a contribution to literature.Aim This study investigated the relationship between investor tax preference parameters (of individuals, corporates, and institutions) and payout methods (namely dividends, capital distributions, additional shares, and share repurchases).Setting The study used data collected in respect of companies listed on the Johannesburg Stock Exchange (JSE) in South Africa for the financial reporting periods ranging from 2012 to 2019.Method A regression analysis of panel data was employed to relate the changes in payout methods to changes in profits, investor tax preference parameters, the lagged levels of variables, and ownership concentration dummy variables.Findings The empirical evidence of this study revealed that investor tax preferences affected dividends as a payout method. This accordingly suggests that the tax differential of dividends and capital gains affect the supply of dividends in South Africa.Conclusion The study contributes empirical evidence in support of the taxes and tax clienteles theory from a developing country perspective. This could suggest that tax reform in a developing country, in this case, South Africa, has a more pronounced effect on payout methods than in developed countries.
  • Publisher: Pretoria: AOSIS
  • Language: English;Portuguese
  • Identifier: ISSN: 1015-8812
    ISSN: 2222-3436
    EISSN: 2222-3436
    DOI: 10.4102/sajems.v25i1.4534
  • Source: SciELO
    Coronavirus Research Database
    ROAD: Directory of Open Access Scholarly Resources
    ProQuest Central
    DOAJ Directory of Open Access Journals
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