The wealth effects of dividend tax cuts: evidence from the Malaysian REIT’s market

Dividend tax reforms for REIT sector in Malaysia provide a rare opportunity to examine the impact of dividend taxation on firm valuation.It is found that dividend tax cut announcements result in positive abnormal returns.There are evidences to suggest that REITs with a higher retail and institutional ownership representing the main beneficiaries of these tax cuts are associated with higher cumulative abnormal returns (CARs).It is also found that dividend payout increased significantly during the quarter immediately after the implementation of the first dividend tax cuts. These findings are consistent with the "old view" of dividend taxation which posits that dividend tax cut could affect firms' investment and payout policies