Title

Taxing share repurchases

Authors

Ajit Dayanandan, University of Alaska, Anchorage
Han Donker, Central Washington UniversityFollow
John Nofsinger, University of Alaska, Anchorage

Document Type

Article

Department or Administrative Unit

Accounting

Publication Date

12-2022

Abstract

The US Inflation Reduction Act of 2022 imposed a 1% excise tax on share repurchases. We can learn from corporate reaction to such a new policy in India. The Indian federal government recently levied a 20 percent tax, plus surcharge, on share repurchases. We show that companies did not slow down their share repurchase initiation. However, to offset the added taxes, they increased their capital investment. The combination of the share repurchase and capital investment decreased their free cash flow.

Comments

This article was originally published in Economics Letters. The full-text article from the publisher can be found here.

Due to copyright restrictions, this article is not available for free download from ScholarWorks @ CWU.

Recommended Citation

Dayanandan, A., Donker, H., & Nofsinger, J. (2022). Taxing share repurchases. Economics Letters, 221, 110879. https://doi.org/10.1016/j.econlet.2022.110879

Journal

Economics Letters

Rights

© 2022 Published by Elsevier B.V.