학회소식
[2019년 제 4차] The Estate Tax and the Payout Policy in Family Firms
작성자 : 관리자
조회수 : 44
게시일 :
2019-12-13
I examine how family owners’ incentives to minimize estate taxes affect payout policies in family firms. To address endogeneity, I use several exogenous shocks: the Tax Reform 2001, the Tax Reform 2010, a family owner’s sudden diagnose of a fatal disease, and his death. I find that the abolition announcement of federal estate taxes in 2001 lead to increasing payouts while the reactivation in 2010 is associated with decreasing payouts. Since state estate tax is closely related to the federal estate tax, family firms located in states where state estate tax was expected to be repealed provide higher payouts than other family firms and non-family firms after the Tax Reform 2001. In the event study, after family owners are suddenly diagnosed with fatal diseases, they reduce share repurchases for the purpose of minimizing the estate tax, but increase dividends after their death to pay the estate tax. I also find that family firms with young CEOs and family CEOs without any other estate tax saving techniques distribute more payouts after the Tax Reform 2001 than other family firms and non-family firms.
