Dividend Income Research Articles

Tax Reforms and the Decline of the London Stock Market: The Untold Story

234 Various reasons have been put forward for the declining global relevance of the London equity market. Reform proposals and changes already implemented target some of the major problems identified as reasons for the stock market’s decline. Surprisingly, tax related explanations for the current state of the UK stock market are largely absent from the discourse. This paper argues that the preferential tax treatment of the dividend income of UK pension funds and insurance companies introduced in the early 1970s and repealed in the mid 1990s first contributed to the UK stock market’s growth by implicitly subsidising financing via equity and encouraging the flow of the funds of these investors into the market, and subsequently led to the market’s decline as a result of the outflow of the funds of the two major classes of institutional investors: UK pension funds and insurance companies. The key implication of this argument is that omitting tax as a major factor in the decline of the UK stock market risks ending up with reforms that can, at best, do little to change the current situation.

상장지수펀드의 성과에 영향을 미치는 상장지수펀드의 횡단면 특성

This study investigates how cross-sectional characteristics of ETFs affect the long-term returns of ETFs. We use tracking multiples, underlying market classification, tax type, manager, underlying index, volatility, replication method, classification system, index producer, and underlying asset class as cross-sectional characteristics, all of which are characterized by nominal variables. The performance of ETFs is characterized by Dollar Cost Averaging (DCA) returns, Lump-sum deposit (LD) returns, and return differential (RD=DCA-LD). Tracking multiples are categorized into 1X Inverse, 2X Leveraged, 2X Inverse, and Normal, and underlying market classifications are categorized into Domestic, Domestic & International, and International. Both tracking multiples and underlying market categorization had a cross-sectional impact on DCA returns, LD returns, and RD. Taxation type had a significant cross-sectional effect on DCA and LD returns only for non-taxable. Dividend income tax (separately taxed real estate ETFs) had an impact only when the dependent variable was DCA returns. Dividend income tax (foreign equity only ETFs) had no effect on DCA and LD returns.

Impact of contract farming on green technological efficiency of farmers: a comparative study of two contract organizational models

IntroductionEngaging in contract farming represents a crucial avenue for developing countries to integrate small farmers into modern agricultural practices. Existing research believes that contract farming offers a promising opportunity for fostering sustainable agricultural development. However, insufficient attention has been directed toward investigating the varying impacts of different organizational models within contract farming on farmers' transition to green production practices.MethodsThis study investigates the impact of contract farming on green technological efficiency of farmers using survey data from 719 wheat growers in Shandong Province, China. The propensity score matching method and multiple mediation effects models are employed for empirical analysis.ResultsThe organizational model plays a pivotal role in determining whether participation in contract farming can improve the green technological efficiency of farmers. Participation in an integrated model demonstrates a significant effect on improving green technological efficiency, whereas participation in a quasi-integrated model does not show a significant improvement. Integrated contract farming can improve green technological efficiency through expanding the degree of land consolidation and enhancing the level of productive service, whereas quasi-integrated contract farming improves green technological efficiency only by enhancing production intensification. As an economic incentive measure, the effect of contract purchase price on strengthening the enhancement of green technological efficiency in the quasi-integrated model is moderate only when the contract purchase price exceeds the local average selling price of wheat by more than 19.3%. Conversely, the moderate effect of farmers' dividend income in the integrated model remains consistent, with higher dividend incomes correlating with a stronger moderating effect.DiscussionThe impact of contract farming on green technology efficiency correlates significantly with the organizational model. Compared with the quasi-integrated contract farming model, the integrated model distinctly excels in advancing farmers' green technology efficiency, evidenced by its ability to consolidate fragmented land, provide productive services, and offer economic incentives. Therefore, to unlock the latent potential of contract farming in driving agricultural green transformation, a shift toward organizational models with higher levels of integration is essential.

The Effect of Dividend Policy, Capital Structure, and Exchange Rate on Stock Returns in Industrial Sector Business Entities

The purpose of this study is to examine how Dividend Income, Capital Structure, and Exchange Rate affect Stock Market Performance. The sample consisted of 12 companies trading on the Indonesia Stock Exchange (IDX) selected using the Purposive Sampling method, resulting in 63 observations for each variable. Data from audited financial statements, tax reports, and stock market prices are published by Bursa Indonesia (IDX). Data analysis was performed using regression analysis techniques. The results of this study show that the Exchange Rate, Dividend Payout Ratio (DPR), and Debt to Equity ratio (DER) all have a significant impact on stock prices. Individually, the Exchange Rate and DER have significant effects, with the Exchange Rate having a negative effect and DER having a positive effect, but the DPR having no significant effect. The coefficient of determination shows that 10.8% of the stock price variation can be explained by the three variables studied, while 89.2% can be explained by other factors not included in the study.

주주과세제도의 문제점과 개선방안

[Purpose] The distribution of company property to shareholders has become smoother since the revision of the Commercial Act in 2011, including allowing reserve reduction dividends. However, the related shareholder taxation system still needs to be revised. The purpose of this study is to improve the shareholder taxation system in case of reserve reduction dividends, paid－in capital increase, and capital reduction. with awareness of the problem that the shareholder taxation system is inadequate. As a result, this study aims to propose a realistic tax law amendment.
 [Methodology] Analysis of relevant overseas cases (USA, Germany, Japan) and related previous studies were investigated and presented.
 [Findings] First, there is an inadequacy in that when dividends are reduced by reserve, if dividends exceed the acquisition price of stocks held by shareholders, taxation is not imposed. In relation to this, the Corporate Tax Act stipulates that taxation will be imposed from 2023, but the Income Tax Act has not yet been revised. Accordingly, a revision of the Income Tax Act was proposed. Second, in Korea, capital reduction is treated as dividend income and taxed. However, the economic nature of capital reduction is closer to the transfer of stocks by shareholders. The current calculation structure of fictitious dividend income is also very similar to the capital gains method. Therefore, this study proposed that fictitious dividends be taxed as capital gains under the Income Tax Act. Third, if the compensation received due to resignation, withdrawal, or reduction in investment exceeds the acquisition price of the stock, it is taxed as a fictitious dividend. At this time, there is a problem in that dividend income varies depending on the acquisition price. Accordingly, this study proposed dividing the profits distributed to shareholders into the return of capital and the distribution of profits.
 [Implications] This study has implications in that it suggests ways to improve the shareholder taxation system that can minimize friction with the current tax law and increase legal stability.

Stock market and the psychological health of investors

AbstractUtilizing a national individual‐level medical dataset and the home bias phenomenon in investment, our study shows a strong and robust link between declines in local stock returns and increased antidepressant consumption among investors. This effect intensifies in areas with higher per capita dividend income, suggesting a direct relationship between higher stock ownership and stronger responses. We confirm that portfolio losses, not local economic conditions, are responsible for increased antidepressant usage during market downturns. Using the frequency of psychotherapy sessions yields similar findings. Moreover, our study supports the loss aversion hypothesis as we find positive stock returns do not influence antidepressant usage.

Modelling Wealth and Wealth Inequality in Bulgaria

This paper analyses net wealth and net wealth inequality determinants in Bulgaria, for the 2000-2020 period. The econometric results suggest that the introduction of corporate and individual flat tax rates in 2007 and 2008 contribute to households’ net wealth creation but have no significant association with inequality variables. Interest rates on mortgage loans, cost of debt, budget surpluses and inflation have a negative association with wealth, while the value of houses, arable land, equity, interest income, budget deficits contribute to net wealth growth. The top percentile increases its wealth share supported by the value of houses, equity and positive current account to Gross Domestic Product (GDP) values, however the cost of debt and GDP per capita are in a negative association with top percentile inequality. The bottom half of the population increases its wealth share with higher GDP per capita values and higher consumer loans rates, however inflation affects it negatively. Inflation and investment income are in a positive association with the Gini coefficient, while interest rates on consumer loans, cost of debt, GDP per capita, Government revenues, dividend income, equity, and the value of houses reduce inequality.

Dividend-tax avoidance trade and its impact on the stock market

This study uncovers a unique dividend-tax avoidance trade that allows high-bracket investors to circumvent taxation on dividend income. As the first comprehensive analysis, we examine diverse investor types, implementation techniques, and the implications for stock prices. Utilizing unique account-level trading data from the Taiwan Stock Exchange, we present empirical evidence highlighting the activities of traders in both the stock and warrant markets. These traders simultaneously sell stocks, buy call warrants before the ex-dividend day, and close their positions afterward. Our findings reveal that this behavior frequently occurs in stocks with issued warrants and low imputation tax-credit ratios. Additionally, we observe substantial disparities in trading behaviors among diverse investor types, including foreign institutions, investment trusts, dealers, domestic institutions, and retail investors. The empirical results indicate that dividend-tax-avoidance trades negatively affect stock prices before dividend payments.

Analysis on the Implementation Effect of Microsoft Corporation's Financial Strategy

Microsoft, traditionally a software monarch, has metamorphosed into a multifaceted tech titan, with cloud services and enterprise solutions as its modern-day driving points. On the stage of global science and technology business, financial strategy plays the role of a beacon, illuminating the complex financial situation and strategic positioning of enterprises. Based on Microsoft's public financial information and data, this paper analyzes its financial strategy, explores the implementation effect of its financial strategy, finds its existing problems, and puts forward corresponding suggestions to promote its long-term stable development. The study found that Microsoft has strong R&D investment and strategic layout ability, which can bring excellent returns to its investors, and good financial performance indicates a strong driving force for its diversified development in the future. In the future, Microsoft should pay more attention to the dividend income of investors to match the growth of the enterprise, and continue to increase its R&D ability to enhance its growth ability. This enriches the research on the implementation effect of Microsoft's financial strategy under the current "cloud first" business model, and the improvement suggestions put forward will help Microsoft improve its financial strategy and provide reference for peer enterprises.

The Influence of Investment on the Probability of Tencent Ltd Period 2008 – 2022

This research examines the influence of investment on profitability at Tencent Ltd. The data used is secondary data, which is the financial statements of Tencent Ltd. for the period 2008–2022. The method used is quantitative with multiple linear regression analysis, coefficient of determination, t-test, and F-test by processing data using Eviews software 10. The results show that Investment Cash Flow and Dividend income, which are Investment variables, have no effect either partially or simultaneously on Return on investment, which are Profitability variables at Tencent Ltd. (influenced by a level of 6.93%). This condition indicates there is no increase in profitability from investment cash flows and dividend income.

재건축조합의 일반분양용 토지 취득 시 취득세 과세 및 회계상 문제점에 관한 연구

Almost every housing reconstruction association(hereafter referred to as “Association”) acquires land parcel from the association members (hereafter refer to as “member”), to raise construction cost for the general public sales portion. There are a several acquisition tax issues and problems resulting from the association acquiring land on an acquisition tax when the association acquired the land from the members. To eliminate this controversy issues, the government authority amended The Local Tax Act after The Supreme Court judged that acquisition tax is not liable under the Local Tax Act law at that time.
 According to previous discussions whether there is acquisition tax liability on the land acquired by the association from the association members on the general public sales portion of reconstructed houses, this is based on the theory that the land was remaining portion of trust property which was received on trust from the member of association to the reconstruction association. This logic influenced tax and the legislative authorities on interpretation of the relevant regulations.
 However, these land parcels acquired by the association from the members to provide construction cost for the members’ house, i.e. the land is in recompense for development outlay by the regulation of the Act on the Improvement of Urban Area and Residential Environments. Therefore, this land is not trust property to the association by investment-in-kind from the members according by the legal act. Instead it is intrinsic property by the original acquisition to the association according to the regulation of law. So, it is proper and correct to tax this acquisition of land from the members to the association.
 After the housing reconstruction completed, the newly reconstructed houses were registered under the name of association members because members owned the land. It means logic of “I built my own house by myself” based on the original acquisition, it is not the acquisition by succession from the association to the members based on the logic of “giving old house and receiving new house”.
 Based on this kind of logic, there is no investment-in-kind of the newly constructed house received by the members from the association after transferring the old house to the association.
 On other hand, we can say, if that the association received a parcel of land for free from the members to build the general public sale house, this does not also make sense because no one will provide his/her real property without proper consideration, i.e. it means the association did not acquire by succession by the investment-in-kind or free of cost from the members for the general public sale portion of house.
 However, tax authorities deem that the association acquired the land by succession without cost instead of original acquisition with payment when government tax levy on the acquisition tax. This assumes very important issues because it affect the corporate income tax, accounting regulations for the association including acquisition tax to the association and dividend income tax to the association members.
 According to the accounting ordinance of the Rearrangement and Reconstruction of housing in Seoul City, the city deemes that the association acquired the parcel of land by exchange between the association and its members which is the view of acquisition by succession theory. However, in order to apply view of exchange, there should be an actual exchange of the association’s the newly constructed real estate and previously owned land by the members. But no exchange existed because both the newly-built-house and previously owned land were owned by the members.
 The sales of land to the general public sales is characterized as an original acquisition with consideration, but tax authorities impose acquisition tax under the view of acquisition by succession without consideration.

POLA KEMITRAAN ANTARA PERUSAHAAN MODAL VENTURA DENGAN USAHA MIKRO KECIL DAN MENENGAH UNTUK MENINGKATKAN DAYA SAING USAHA

The government's efforts to overcome the difficulties of micro, small and medium enterprises (MSMEs) regarding funding have collided with collateral problems (the banking sector), namely with financing institutions. Financing institutions are believed to be one way to overcome the problems of companies that do not have sufficient assets as collateral for the proposed bank loans. One of the financing institutions that are friends of small entrepreneurs is venture capital or Venture Capital. In general, venture capital financing does not look at collateral belonging to the Business Partner Company. Therefore, Venture Capital Companies are also called long-term investments with the main objective and as compensation for the high risk of the investment is the acquisition of profit, not interest or dividend income

Will Brazil Finally Tax Dividend Income?

In 1995, Brazil began allowing corporations to deduct distributed earnings and profits from income while also exempting dividends from taxation at the shareholder level. Over the past three decades, elected officials from across the political spectrum have sought without success to change that system, which critics claim unfairly rewards taxpayers at the top of the income pyramid. Paulo Costa explains why, facing economic headwinds and government coffers depleted by the COVID-19 pandemic, the new government of President Lula might finally succeed.

Investment Analysis of Listed Companies in The Oil & Gas Industry

The oil and gas industry is highly dependent on global financial markets. Due to the worldwide repercussions of the COVID-19 pandemic, the Russia-Ukraine War, and the upcoming third energy transition, the oil and gas industry may provide considerable financial gains from share price increases and attractive dividend income. In this article, ExxonMobil, Chevron, and ConocoPhillips, three significant oil and gas firms in the United States, are assessed using ratio analysis. This project explores which of these three companies are deserving of investors' attention and whether they can respond to future uncertainties by analyzing the companies' financial data and policies. ConocoPhillips is chosen as the best company to invest in for the short-term due to its larger profit margin and stronger growth potential. Long-term investments in Exxon Mobil are suggested due to the company's relatively low risk and sustainable strategy.

The Accounting and Fiscal Regime of Dividends in 2023

The Government Ordinance No. 16/2022 has some novelties with regard to the tax treatment of dividends. Thus, starting with the 1st of January 2023, the dividend tax rate increases from 5% to 8% for the dividends paid to legal persons and to resident/non-resident natural persons, as well as to privately administered pension funds and to the optional pension funds. As an element of novelty, the Government Ordinance No. 16/2022 brings a series of clarifications regarding the conditions that must be fulfilled in view of applying the exemption of dividend payments made by a Romanian legal person to another one, with regard to the form of organisation and the application of the profit tax or of another tax which replaces it, without the possibility of an option or exemption. Besides the increase of the tax rate, the Government Ordinance No. 16/2022 also brings changes with regard to the health contribution rules for the dividend incomes. Thus, starting with the incomes corresponding to 2023, the payment obligation of the health contribution for the dividends collected by the natural persons appears from the six minimum salaries ceiling, compared to the 12 salaries ceiling in the previous year. While the dividend tax is applied according to the year of their distribution, the health insurance contribution is applied by taking into account their actual collection date. If the dividends are distributed during 2022, but are paid in 2023, the taxation rate is kept at 5%, but the health insurance contribution falls within the rules from the year of their collection. The distribution of dividends can be made annually, after the approval of the annual financial statements corresponding to the ended financial year, or quarterly, throughout the year, after the approval of the interim financial statements. Law No. 370/2022 clarifies the fact that, in case the company decided to distribute dividends based on the interim financial statements prepared during 2022, the 5% taxation rate is kept, without recalculating the tax on the respective dividends after their regularisation based on the annual financial statements corresponding to the financial year 2022, approved according to the legal regulations.

The effect of currency protected deposits on financial performance of participation banks

Purpose- The aim of this study is to measure the effect of the Currency Protected Deposit (KKM) application, which entered into force on December 21, 2021, on the financial performance of participation banks.. Methodology- In the study, a hybrid MCDM method consisting of CRITIC and WASPAS methods was used to measure the effect of Currency Protected Deposit on the financial performance of participation banks. The data regarding the banks in question have been compiled from the website of the Banking Regulation and Supervision Agency (BDDK). Within the scope of the study, 12-month data for 2021 and 9 months for 2022 were included in the analysis. Financial performance of participation banks was evaluated on 5 criteria: Total Dividend Income, Return on Assets, Return on Equity, Operating Expenses/Total Assets, Foreign Resources/Total Equity. Findings- As a result of the analysis made within the scope of the study, it has been determined that the criterion with the highest weight in determining the financial performance of participation banks is the Operating Expense / Total Assets criterion. According to the results of the WASPAS method, it was determined that the participation banks showed the worst performance in the period under consideration in May 2021. The period with the best performance was determined as September 2022. Conclusion- The results of the analysis conducted within the scope of the study show that the performance of participation banks fluctuated in 2021 and there was a decrease in their performance during the period under consideration. It has been determined that the financial performance of participation banks has increased with the Currency Protected Deposit (KKM) application, which came into effect in December 2021, and the performance increased continuously in 2022 in general, and the best performance was shown in September 2022.. Keywords: Participation bank, financial analysis, financial performance JEL Codes: D81, G21, L25, P47

Calculating the country risk embedded in treaty-shopping networks

This paper constructed a tax treaty network to measure the country risk embedded in treaty-shopping networks. The results showed that when moving dividends directly without treaty shopping, MNEs were taxed at 11.2 %, but with treaty shopping, a tax rate of 5.3 % was imposed. When detouring around risk countries, MNEs paid taxes at a rate of 4.5 %. Clearly, MNEs can minimize their tax burdens by detouring around risk countries. In the case of dividends, intermediate routes included the UK, Sweden, Kuwait, Spain, and Denmark. These countries except the UK were not previously known as conduit countries. We also looked at network changes in individual countries. When moving funds outward from China, Iran, and Venezuela, MNEs detouring around risk countries incurred reduced tax-saving benefits on interest income and royalty income. However, when moving funds from the US to China, Saudi Arabia, Japan, Russia, Ireland, and the UK, treaty-shopping benefits remained unchanged even if risk countries were bypassed. Among risk countries, those with less risk applied higher tax rates. In the case of dividends, the riskier the country, the lower the dividend income tax rate. This situation results from a desire to attract FDI. We reflected the country risk in our treaty-shopping model.

ВИДЫ АКЦИЙ И ИХ ПРАВОВОЙ РЕЖИМ В ЗАРУБЕЖНОМ ЗАКОНОДАТЕЛЬСТВЕ

Shares in foreign law differ in the variability of the rights they secure. In the global corporate practice, exceptions to the “one share – one vote” rule are possible for ordinary shares, models of disproportionate granting of rights on shares are possible as well. Various world legal systems have developed their own approaches to the construction of the legal regime of shares. The regime of shares is different in the law of the states of the Anglo-Saxon system and in the continental law of Europe, as well as other countries that have taken any one of those systems of law as a basis. Foreign legal systems are characterized by liberal and dispositive regulation of the legal regime of shares, especially the differentiation of rights by shares. In comparison with Russian legislation, shares in foreign legal systems are characterized by greater variability in the content and scope of the rights assigned, as well as a greater degree of dispositivity in choosing which shares, with what volume of rights, a joint-stock company can issue. For investors, that aspect has a positive value and provides flexibility of participation and legal regulation of joint-stock legal relations in corporations. Various types of preferred shares in foreign legal systems (fixed-dividend shares, protected shares, redemption shares, savings shares) provide shareholders with more guarantees for receiving dividend income than in Russian corporate law.

Czech Monetary and Fiscal Policies: Big Deficits and Challenges

Czech monetary and fiscal policies require fundamental reform, even without considering the current war in Ukraine. The tax structure can be rationalized within 1–2 years. The very introduction of a single collection point must be taken seriously, and there is no need to undertake a fundamental tax reform to implement its main stage. Czech social security contributions are very specific, dominated by their tax nature. This allows for a quick consolidation of employer contributions into one levy to the state budget and the inclusion of employee contributions in personal income tax. Only slightly more politically challenging is the integration of dividend income taxation into corporate tax and the removal of interest from corporate tax costs. The OECD recommendations are one-sided, mechanically oriented according to the neoliberal welfare regime. Our analyses and subsequent proposals do not foresee and do not require any reform of social security benefits, including public funding of healthcare. Strengthening value-added tax in the tax structure is completely wrong. The overall insufficient taxation of value added in the Czech financial sector needs to be eliminated. Czech monetary policy is not very effective in the fight against inflation, the link to overall economic policy is lacking. This policy has created excessive foreign exchange reserves that can be transferred to the state assets. It is economically desirable to link the Czech currency to the euro. The proceeds of the issue of all money belong to the state budget.

Effect of Corporate and Dividend Income Tax Rates on Bank Capital

The study uses quantitative method to estimate the effect of Corporate- and Dividend-Income-Tax rates on Total-Bank-Capital, Tier-1-Bank-Capital, and Tier-2-Bank-Capital ratios. The samples are banks from ASEAN-4 countries, i.e. Indonesia, Malaysia, The Philippines, and Thailand, taken in 2020. The effects of Corporate- and Dividend-Income-Tax on Total-Bank-Capital, Tier- 1-Bank-Capital, and Tier-2-Bank-Capital ratios were analyzed using cross-section regression. We placed Total-Bank-Capital, Tier-1-Bank-Capital, and Tier-2-Bank-Capital ratios as the dependent variable. Corporate- and DividendIncome-Tax rates were placed as the independent variable. Both Corporate and Dividend-Income-Tax rates are statistically significant and positively affect the Total-Bank-Capital and Tier-1-Bank-Capital. The findings suggest that high Corporate- and Dividend-Income-Tax rates reduce banks’ significant risks. Corporate-Income-Tax rates and negatively affect Tier-2-Bank-Capital. The finding suggests that lower tax rates will induce banks to increase their Tier-2- Bank-Capital ratio. However, the effect of Dividend-Income-Tax rates on Tier-2- Bank-Capital is not statistically significant.