Individual investors’ dividend tax reform and stock price crash risk

Xinyao YANG; Zhaoyi LIU; Tao LI

doi:10.1016/j.frl.2023.103746

Individual investors’ dividend tax reform and stock price crash risk

Xinyao YANG
, Zhaoyi LIU
, Tao LI^*

^*Corresponding author for this work

Research output: Journal Publications › Journal Article (refereed) › peer-review

3 Citations (Scopus)

Abstract

This paper examines the effect of individual investors’ dividend tax on stock price crash risk. By introducing the implementation of dividend tax reform (DTR) for individual investors, we present strong evidence that the reduction of the individual investors' dividend tax reduces the stock price crash risk. Mechanism analysis shows that DTR reduces the stock price crash risk by enhancing investor supervision and reducing the stock selling behavior of executives. Furthermore, DTR also reduce the stock price synchronicity. By revealing the effect of the individual investors’ DTR on stock price crash risk, our study presents a clear policy to regulators concerned with high-quality development of the capital market.

Original language	English
Article number	103746
Journal	Finance Research Letters
Volume	54
Early online date	1 Mar 2023
DOIs	https://doi.org/10.1016/j.frl.2023.103746
Publication status	Published - Jun 2023
Externally published	Yes

Bibliographical note

Publisher Copyright:
© 2023

Funding

Fund Project: “The 14th Five-Year” Beijing Education Scientific Planning Project of 2021, “Research on the Construction Mode and Path of Higher Vocational Industrial College from the Perspective of Synergy Theory (Project Number:CGDB21211) Head of project: Tao Li

Keywords

Capital market efficiency
Dividend tax reform
Individual investor
Stock price crash risk

Access to Document

10.1016/j.frl.2023.103746

Cite this

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title = "Individual investors{\textquoteright} dividend tax reform and stock price crash risk",

abstract = "This paper examines the effect of individual investors{\textquoteright} dividend tax on stock price crash risk. By introducing the implementation of dividend tax reform (DTR) for individual investors, we present strong evidence that the reduction of the individual investors' dividend tax reduces the stock price crash risk. Mechanism analysis shows that DTR reduces the stock price crash risk by enhancing investor supervision and reducing the stock selling behavior of executives. Furthermore, DTR also reduce the stock price synchronicity. By revealing the effect of the individual investors{\textquoteright} DTR on stock price crash risk, our study presents a clear policy to regulators concerned with high-quality development of the capital market.",

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AU - YANG, Xinyao

AU - LIU, Zhaoyi

AU - LI, Tao

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N2 - This paper examines the effect of individual investors’ dividend tax on stock price crash risk. By introducing the implementation of dividend tax reform (DTR) for individual investors, we present strong evidence that the reduction of the individual investors' dividend tax reduces the stock price crash risk. Mechanism analysis shows that DTR reduces the stock price crash risk by enhancing investor supervision and reducing the stock selling behavior of executives. Furthermore, DTR also reduce the stock price synchronicity. By revealing the effect of the individual investors’ DTR on stock price crash risk, our study presents a clear policy to regulators concerned with high-quality development of the capital market.

AB - This paper examines the effect of individual investors’ dividend tax on stock price crash risk. By introducing the implementation of dividend tax reform (DTR) for individual investors, we present strong evidence that the reduction of the individual investors' dividend tax reduces the stock price crash risk. Mechanism analysis shows that DTR reduces the stock price crash risk by enhancing investor supervision and reducing the stock selling behavior of executives. Furthermore, DTR also reduce the stock price synchronicity. By revealing the effect of the individual investors’ DTR on stock price crash risk, our study presents a clear policy to regulators concerned with high-quality development of the capital market.

KW - Capital market efficiency

KW - Dividend tax reform

KW - Individual investor

KW - Stock price crash risk

UR - https://www.scopus.com/pages/publications/85149860275

U2 - 10.1016/j.frl.2023.103746

DO - 10.1016/j.frl.2023.103746

M3 - Journal Article (refereed)

AN - SCOPUS:85149860275

SN - 1544-6123

VL - 54

JO - Finance Research Letters

JF - Finance Research Letters

M1 - 103746

ER -

Individual investors’ dividend tax reform and stock price crash risk

Abstract

Bibliographical note

Funding

Keywords

Access to Document

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Cite this