Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
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TY - JOUR
T1 - Tax-efficient irregular payout methods: the case of B share schemes and capital repayments via a court-approved scheme of arrangement
AU - Young, S E
AU - Oswald, D
PY - 2008
Y1 - 2008
N2 - Purpose - To explain how the advance payment of corporation tax (ACT) distorted the dividend payment system in the UK. Design/approach/methodology - Reviews prior studies of surplus ACT and dividend payments, extending to cover irregular payments such as share repurchases and B (bonus) share schemes. Describes the UK partial imputation corporation tax scheme, and the ACT system from 1970 to 1990, modified by the FID scheme for firms remitting foreign profits in 1994. Explains B shares and court-approved schemes of arrangement. Samples 651 announcements of irregular cash payments from April 1996 to April 2003, including self-tender offers and special dividends. Models three surplus ACT proxies and runs logistic regressions. Findings - Finds that B share schemes and court-approved schemes were founded before the 1999 end of ACT, while self-tender offers and special dividends became popular afterwards. Practical implications - Argues that firms started innovatve and sophisticated schemes to avoid paying tax . Originality/value - Presents evidence that tax rules lead to distortion.
AB - Purpose - To explain how the advance payment of corporation tax (ACT) distorted the dividend payment system in the UK. Design/approach/methodology - Reviews prior studies of surplus ACT and dividend payments, extending to cover irregular payments such as share repurchases and B (bonus) share schemes. Describes the UK partial imputation corporation tax scheme, and the ACT system from 1970 to 1990, modified by the FID scheme for firms remitting foreign profits in 1994. Explains B shares and court-approved schemes of arrangement. Samples 651 announcements of irregular cash payments from April 1996 to April 2003, including self-tender offers and special dividends. Models three surplus ACT proxies and runs logistic regressions. Findings - Finds that B share schemes and court-approved schemes were founded before the 1999 end of ACT, while self-tender offers and special dividends became popular afterwards. Practical implications - Argues that firms started innovatve and sophisticated schemes to avoid paying tax . Originality/value - Presents evidence that tax rules lead to distortion.
M3 - Journal article
VL - 38
SP - 49
EP - 70
JO - Accounting and Business Research
JF - Accounting and Business Research
SN - 2159-4260
IS - 1
ER -