02118cas a2200265 a 4500 AALejournalIMF009538 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451867688 1018-5941 BD-DhAAL BD-DhAAL Bond, Stephen. The Effects of Dividend Taxes on Equity Prices : A Re-examination of the 1997 U.K. Tax Reform / Stephen Bond, Alexander Klemm, Michael Devereux. Washington, D.C. : International Monetary Fund, 2007. 1 online resource (30 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students We re-examine the extent to which personal taxes on dividends are capitalized into the equity prices of domestic firms, using data from around the time of the 1997 U.K. dividend tax reform, which removed a significant tax credit for an important group of investors: U.K. pension funds. The tax-adjusted CAPM suggests that the impact should depend on an average of dividend tax rates across all investors, and that U.K. pension funds should reduce their holdings of the previously tax-favored asset: U.K. equities. Given that U.K. pension funds are small relative to the total size of the world capital market, a small open economy-type argument implies that the main effect of the reform would be to reduce U.K. pension funds' ownership of U.K. equities, with little impact on their price. We present evidence which is consistent with these hypotheses. We discuss why previous research (Bell and Jenkinson, 2002) reached a different conclusion. Mode of access: Internet Devereux, Michael. Klemm, Alexander. IMF Working Papers; Working Paper ; No. 2007/204 Full text available on IMF http://elibrary.imf.org/view/journals/001/2007/204/001.2007.issue-204-en.xml IMF e-Library