STOCK REPURCHASE AS A TAX-SAVING DISTRIBUTION

摘要: The personal tax impact on share prices of a permanent distribution via stock repurchase was first modeled by Bierman and West (JF 1966, #4) who argued that the is minimized under ownership same shareholders. Elton Gruber 1968, #1) faulted original model for lack time consistency market forces would lead to an annual turnover ownership. One-year be dominate behavior since saving at maximum in year. This study develops time-consistent theoretical which demonstrates West's intuition correct: Indefinite holding shareholders minimize capital gains thereby maximizing current price both absolute terms relative pure cash dividends. In contrast, owners decrease its minimum as measured ratio two rates, erasing shield repurchase. corrected valuation indefinite period reveals post-tax constitute decreasing non-geometric series.