The relationship between corporate dividend policy and taxation: an overview of listed firms in China

Abstract

Several studies have been demonstrated on the determinants of dividend policy. However, none of them has provided a perspicuous answer on the effect of taxation on corporate dividend policy. This research sought to fathom the relationship between firm dividend policy and taxation among all listed firms in China. Especially, it analyzed the impact of corporate income tax on dividend per share of all industries quoted firms in China. Regression analysis was adopted to formulate both univariate analysis and multivariate analysis. Data used were derived from CSMAR Database during the periods from 2005-2010. The results show that dividend payout may be correlated with tax under a long-term period. It can be concluded that tax may affect the dividend policy more efficiently in the long run.