Abstract

The purpose of this research is to find how the change of Article 91－2 of the “Restriction of Special Taxation Act” influences capital investment decisions in the Korean financial investment market. This study makes general models of capital investment decisions by citing literature reviews and examines a sample of funds which from 2006 to 2007 in the Asset Management Association of Korea's database. This research considers the effects of four factors (expected revenue, risk variable, tax change, and fund scale) on capital investment decisions. The change in Article 91－2 suggests the amount of dividend income that is to be paid to a resident by any investment company or trust under the Act on Business of Operating Indirect Investment and Assets shall not include any amount paid by the investment company or trust concerned from gains and losses derived from trading or evaluation of foreign securities listed on the foreign securities market. Our research shows that the factor of tax change has significant effects on the capital investment decisions. However expected revenue, risk variable and fund scale do not have significant effects on capital investment decisions in the Korean financial investment market.

Keywords

• Capital investment decision
• Tax favor
• Financial investment product
• International investment fund
• Collective/Indirect investment

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