Knowledge that Transforms

To make high-quality research more accessible and easier to explore.

Fields:
42 results ✕ Clear filters

Dividends, taxes, and common stock prices

Michael J. Barclay
Journal of Financial Economics 1987 19(1), 31-44
This study examines the ex-dividend day behavior of common stock prices before the enactment of the federal income tax. On ex-dividend days during the pre-tax period, stock prices fell, on average, by the full amount of the dividend. The data are consistent with the hypothesis that (i) investors in the pre-tax period value dividends and capital gains as perfect substitutes and (ii) the differential taxation of dividends and capital gains has since caused investors to discount the value of taxable cash dividends in relation to capital gains.

The choice of organizational form The case of franchising

James A. Brickley; Frederick H. Dark
Journal of Financial Economics 1987 18(2), 401-420
We examine companies that franchise some units and centrally operate (‘own’) others. The agency problems confronting these two organizational forms are analyzed. Testable hypotheses are developed. The empirical results support the notion that owning versus franchising reflects a trade-off among agency-related problems. The cost of monitoring store managers appears to be especially important in the own/franchise decision. The level of repeat business and initial investment requirements per unit also appear to be important.