Accounting professors published in Advances in Taxation

Mike Ilitch School of Business accounting professors Tony Billings, Cheol Lee and Jaegul Lee had a manuscript —“Dividend Tax Policy and Private-Sector Research and Development Spending: A Modified Perspective on the Impact of U.S. 2003 Tax Reform Act on R&D Spending" — accepted for publication in the Advances in Taxation journal.

Advances in Taxation publishes relevant, quality manuscripts from around the world on any aspect of federal, state, local, or international taxation including tax compliance, tax planning, tax policy issues, and current issues in tax.


The paper examines whether the lowering of dividend taxes as part of the U.S. 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 U.S. 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 the 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.

View all news stories