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Much Ado About Dividends
Setting aside the broader social and macroeconomic controversies, what would President Bush's proposal to eliminate the double taxation of dividends mean for valuation and strategy? Not much, the authors say: it wouldn't raise share prices, increase shareholder wealth, change dividend strategies, correct a bias to debt, or affect the way companies finance growth. In short, this is one tempest that doesn't even fill a teapot.
The take-away: For most companies and shareholders, the proposal to eliminate double taxation on dividends will have little if any effect.
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