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The chapter examines whether the lowering of dividend taxes as part of the US Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) resulted in an increase in dividend payouts at the expense of research and development (R&D) spending. Using 1,206 US firm-years data, we find that R&D investments responded negatively to higher levels of dividend payout in the post-JGTRRA of 2003 tax regime compared with the pre-regime. We also find that R&D intensity and financial constraint moderate this negative relation. That is, this relation only holds for firms in low R&D-intensity industries and firms facing high levels of financial constraint. From a tax policy perspective, even though the tax cut on dividend receipts has the benefit of lowering the cost of equity capital, the benefit appears to have come at the expense of R&D investment.

This study aims to provide a modern perspective on the role of dividends in smaller developed countries such as Ireland by examining views regarding the determinants of payout levels, the role of taxation and the relevance of conventional signalling theory.

The study employs semi‐structured interviews with the financial directors of 20 leading Irish companies.

The results suggest support for the notion that dividend policy affects share valuations. However, views regarding this issue – and the role of taxation and signalling theory – vary markedly between quoted and unquoted firms as well as depending on firms' dividend histories.

The study suffers from the problem that in interview‐based research the participants are necessarily a self‐selecting group. Notwithstanding this point, the evidence suggests that the views of managers in a nation with a small, but highly developed, stock market are in line with those in countries with much larger exchanges. Further research could usefully extend the analysis and establish whether similar views exist in other countries with relatively small stock markets, but where the exchange is in an “emerging” rather than “developed” state.

The contribution of the paper comes from the uniqueness of the Irish setting: the Irish market is relatively small but, unlike many similarly sized markets, it is highly‐developed, with long‐term historical links to the London Stock Exchange. The results, therefore, provide evidence about the extent to which earlier findings based on the world's largest developed markets also prevail in those that are more modestly sized.

The paper examines how product innovation in the UK banking industry has been affected and is likely to be affected by changes in regulation and in government policy. It considers the issues faced by banks in pursuing a market‐oriented approach in this environment.

The rapidly changing regulatory environment in the UK is described and analysed, primarily in the context of the market for mortgage products and medium‐ to long‐term savings products. The paper describes the main events of the last 20 years and analyse their immediate impacts. The paper examines the most recent changes, identify the direction of policy change and consider the implications.

Empirical evidence suggests that the development of mortgage and pensions products has been closely linked to changes in regulation and government policy. This has resulted in an adverse impact on the brand values and reputations of banks. An analysis of the most recent events identifies two different regulatory approaches which banks now have to manage.

A review of the literature shows that very little detailed research has been carried out into the impact of regulation and government policy on banks and financial services companies.

With this lack of systematic research and analysis, and in the absence of a theoretical framework, it is difficult for banks, regulators and government to make informed decisions.

The paper highlights and analyses an increasingly important issue which has not been addressed in any detail in the literature. The paper puts forward an agenda of research questions and propositions for further research.

Although tax relief on pensions is a controversial area of government expenditure, this is the first study of the tax effects for a real-world defined benefit pension scheme. First, we estimate the tax and national insurance contribution (NIC) effects of the scheme's change from final salary to career average revalued earnings (CARE) in 2011 on the gross and net wealth of the sponsor, government, and 16 age cohorts of members, deferred pensioners, and pensioners. Second, we measure the size of the twelve income tax and NIC payments and reliefs for new members and the sponsor, before and after the rule changes. We find the total subsidy split is roughly 40% income tax subsidy and 60% NIC subsidy. If lower tax rates in retirement and the risk premium effect of the exempt-exempt-taxed (EET) system are not viewed as a tax subsidy, the tax subsidy to members largely disappears. Any remaining subsidy drops, as a proportion of pension benefits, for high earners, as does that for NICs.

We analyze cumulative abnormal returns (CARs) around key events leading up to the passage of JGTRRA to determine whether a reduction in the individual tax rate on dividend income affects stock prices, and if so, whether that effect differs for different groups of firms. In general, we find that dividend yield is positive and significantly related to CARs around both the December and January announcements that legislation might be enacted to reduce or eliminate the dividend tax. Consistent with this observation, when Congress subsequently passed the final Senate vote to reduce but not eliminate dividend taxes, we observe positive and statistically significant returns for high-yield dividend firms, but not for other firms. Additionally, we analyze the role of institutional ownership in the relation between firm yield and price reaction. The incentive to buy dividend-paying stocks should not be influenced by the degree to which a firm's stock is held by institutional investors but rather by the firm's dividend yield. Our results suggest that this distinction is important – institutional ownership appears to be significant for tax changes that induce seller-initiated market reactions, but not for changes that increase buyer-initiated reactions.

Both, the UK and Japan abolished the tax credit system for foreign source dividends in 2009 in favour of the exemption system. With the move towards a dividend exemption system the governments intended to enhance the international tax competitiveness of their countries. The purpose of this paper is to evaluate the implications of substituting the credit system for the exemption system in the UK and Japan on cross-border transaction prices when competing for international acquisitions.

The paper uses an economic model under certainty to analyse the changes in cross-border marginal purchase and seller prices as a result of the introduction of the newly introduced dividend exemption system.

Shifting to an exemption system has ambiguous effects on the ability to compete for foreign acquisitions: investors from both countries are able to pay higher prices in the course of acquisitions, but while investors from the UK become more competitive, the relative competitive position for Japanese investors hardly changes and remains relatively constrained, independent of the form of double taxation relief. Thus the author verifies that the international tax regime is not the only determinant influencing the competitive position, ranking second to, e.g., the interaction with international tax rate differentials.

The international tax reforms in UK and Japan in 2009 offer a unique opportunity to study the impact of international tax policy on the international tax competitiveness of multinational firms in the course of foreign acquisitions. Evidence from this paper is not exclusively applicable to the UK and Japan setting. The observed effects shed new light on the intensified debate in the USA of changing the international tax system by analysing the impact on the bidding situation in international acquisitions in a real-world transition scenario.

With property finance it is often a case of grabbing an opportunity as soon as it presents itself. Failure to consider the tax consequences beforehand may mean that it is not such a good deal after all. For example the interest may not qualify for tax relief, or may qualify tomorrow rather than today. If the money is raised overseas the UK Revenue and the lender may be pulling your arms in different directions over whether withholding tax should be deducted: and insult will be added to injury if a loss is incurred on repaying the loan in a foreign currency and that loss is not allowed for tax. At the same time a number of new and innovative financing schemes are coming on to the market. Are these tax effective? By explaining how the tax rides work and drawing attention to the various pit‐falls, this paper illustrates that tax planning needs to be done before signing the finance agreement rather than be faced by a firefighting exercise afterwards.

The purpose of this paper is to examine current thinking and evidence on the extent to which taxation is, or should be, an influence upon dividend policy. To this end, the paper has been divided into two parts. The first reviews the range of normative stances and the empirical evidence in respect of each stance. Discussion mainly addresses large listed companies in the US and, to a lesser extent, the UK. The second part of the paper is based on more practical issues. This focuses attention on smaller, owner‐managed companies, for which there is less empirical evidence relating to dividend policy. This analysis of smaller companies is restricted to the UK taxation system only.

The purpose of this paper is to explain the Regulated Investment Company Modernization Act of 2010, P.L. 111‐325, signed into law on December 22, 2010.

The paper summarizes the Act and provides a detailed explanation and analysis of each of the provisions in the Act.

An investment company registered under the Investment Company Act of 1940 may elect to be taxed as a Regulated Investment Company (RIC) under the Internal Revenue Code. A RIC that satisfies certain additional minimum distribution requirements is generally allowed to deduct the amount of dividends paid to its shareholders in computing the RIC's taxable income and gains, with the result that the RIC's distributed net income and gains can be passed through to its shareholders free of tax at the RIC level. The Act makes a number of changes to the provisions in the Code related to RICs.

The paper provides practical guidance from experienced financial services lawyers.

From time to time we have had occasion to refer to earnings per share in terms of the new ‘imputation’ system of company taxation. This is a somewhat complex system and we have asked our Financial Correspondent to explain in some detail what is involved. In attempting an explanation, he has found it useful to compare the present system not only, as others have done, with the preceding corporation tax system inaugurated by Mr Callaghan in his 1965 Budget, but also with the earlier profits‐cum‐ income tax system. There are of course many other systems of company taxation, but for purposes of explanation a comparison of the three systems — profits‐plus‐income tax, the Callaghan‐type corporation tax, and the imputation system—is sufficient.