Page 91 - 臺大管理論叢第32卷第1期

NTU Management Review Vol. 32 No. 1 Apr. 2022

halved imputation credits on corporate dividend policy. They find that publicly listed
firms in Taiwan change their dividend policies before adopting halved imputation credits.
Unfortunately, the research design of these papers has not addressed whether wealthy tax
affects corporate dividend payouts. Therefore, whether publicly listed firms in Taiwan

change their dividend policies in response to the 2015 tax reform remains unanswered.
In addition, the majority of firms listed on the Taiwan stock market (TWSE) are
family firms. In deciding whether to change dividend policies in response to the increased

shareholders’ dividend income tax, family and non-family firms may weight the tradeoff
between tax and non-tax costs differently because family firms tend to place higher priority
in preserving family reputation. Therefore, we divided our research samples into two
groups, family and non-family firms, to examine the changes in dividend policy of these
two types of firms before and after the 2015 tax reform.

2. Design/Methodology/Approach

Since the implementation of halved imputation credits and wealthy tax has increased
dividend income tax for individual shareholders beginning from 2015, firms, to increase
shareholders’ tax benefit, may increase dividend payouts in the year preceding the 2015
tax reform effective. However, the impacts of these tax reforms may not be the same for all
firms. Firms with high imputation tax credits and high shareholdings of individual directors

and supervisors would be affected more. Accordingly, we conjecture that firms with high
imputation tax credits and high shareholdings of individual directors and supervisors will
have relatively higher dividend payouts in the year preceding the 2015 tax reform; but
relatively lower dividend payouts following the reform to reduce shareholders’ dividend

income tax. Nonetheless, reducing dividend payouts will result in nontrivial non-tax costs
for firms (Lonie et al., 1996; Balachandran, 1998; Travlos et al., 2001; Asimakopoulos et
al., 2007). Hence, although we conjecture that firms with high imputation tax credits and
high shareholdings of individual directors and supervisors may alter their dividend payout

ratios after the 2015 tax reform, we do not make a predetermined prediction.
Moreover, the optimal dividend policies for family firms may not be the same
as those for non-family firms. Although family firms may consider the tax burdens of
their shareholders, they may be even more concerned about non-tax costs such as the

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