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RAUSP Management Journal

versão On-line ISSN 2531-0488


ZAGONEL, Timóteo; TERRA, Paulo Renato Soares  e  PASUCH, Diogo Favero. Taxation, corporate governance and dividend policy in Brazil. RAUSP Manag. J. [online]. 2018, vol.53, n.3, pp.304-323. ISSN 2531-0488.


This study aims to analyze the influence of taxes and corporate governance on the dividend policy of Brazilian companies.


The authors identify the changes of the tax legislation in Brazil in the period 1986-2011 and check their effect on corporate dividend policies for preferred and common shares. The authors use panel data Probit and Tobit estimation to verify the probability of companies to pay dividends under different tax regimes. The final sample comprises 672 companies, 1,159 traded stocks and 30,134 observations


The authors’ results suggest that changes in the tax legislation have a significant influence on dividend payments. Also, firms do not follow target payout ratios, but dividends are moderately dependent on past payments. Dividend payouts are affected by stock voting rights, privatization and dividend deductibility. Changes in regulation that reduce the agency problems among shareholders affect positively payout ratios.

Practical implications

For managers, maximizing shareholders’ value requires taking into account the consequences of the taxation when designing financial policies for the firm. For investors, stock portfolio selection should take into account payout behavior and how changes in dividend taxation affect stocks’ value. For policymakers, the effects of changes in the tax code on corporate behavior are of utmost importance to stimulate private investment and economic growth.


There are several tax law changes in Brazil within the period analyzed, creating a good opportunity to study the effect of taxation on dividend policy and its dynamics over time.

Palavras-chave : Dividends; Corporate governance; Taxes; Interest on equity.

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