| dc.description.abstract | Using Event Study methods, this study examines the stock market reactions to the announcements of the Halved Imputation Credit Policy and explores the relation among the abnormal stock returns of this tax policy and dividend yields, institutional ownerships, and imputation tax credit. We find that (1) The event day of bad news for investors has negative significant abnormal stock returns; by contrast, the event days of good news for investors have positive significant abnormal stock returns, but on the other hand, the event day of the third reading of halved imputation credit policy has no negative abnormal stock returns due to early market reaction, and (2) a firm with higher dividend yield is more easily affected by the halved imputation credit policy, which leads to the fact that the relation between the firm’s stock price and its dividend yield is negative, and (3) only the first event day indicates that institutional holdings mitigate this negative reaction, and (4) only the first event day shows that the firm with a higher imputation tax credit has less cumulative abnormal returns than that with a lower imputation tax credit. Finally, Additional testing part indicates that the dividend yields do not decrease significantly after implementation of the halved imputation credit policy. However, the results show that institutional ownership is positively related to cash dividend yield, and imputation tax credit is negatively related to cash dividend yield, stock dividend yield, and total dividend yield. Not only do our results provide empirical evidence on the impact of the halved imputation credit policy on firm’s valuation, but they also suggest that dividend policy of the firm influences the extent to which dividend taxes are reflected in share values. Our evidence is consistent with the expectation that both firm ownership structure and imputation tax credit influence the firm’s dividend policy. | en_US |