| Summary: | 碩士 === 國立中央大學 === 產業經濟研究所在職專班 === 104 === Ceteris paribus, the opportunity cost of paying cash dividends refers to the forgone benefits that could result from making an investment with the payout. Thus, cash dividend payout is positively associated with cost of equity. In Taiwan, the integrated income tax system, which adopts dividend imputation and imposes additional 10％ surtax on undistributed retained earnings, became effective from January 1, 1998. This study is to investigate whether the positive association between cash payout and cost of equity is mitigated under the integrated income tax system. Our results show that the positive association between cash payout and cost of equity is mitigated after the integrated income tax system, suggesting that the dividend imputation and additional 10％ surtax lowers the opportunity cost of paying cash dividends. Besides, we find that the mitigating effect is more profound in the high-tech industry. While high-tech companies in Taiwan, which enjoy the tax credit of investment, distribute cash dividend with less imputation credit than counterparts of other industries, high-tech companies have less opportunities cost of paying cash dividends after implementation of integration of income tax system.
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