The McKinsey Quarterly looks at the incentive effects of the Bush dividend-cut proposal and decides that it, well, is largely a placebo. Won’t hurt, won’t heal, as most shares are held by tax-exempt entities anyway –

“The fact, however, is that tax-paying US individual shareholders own a minority of all US shares?28 percent in 2002, whereas tax-exempt US institutions and individuals who hold shares in tax-exempt accounts owned 61 percent. (The remainder was in foreign hands.) … Since these investors are indifferent to the issue of taxes on their dividends, they are unlikely to set in motion the kinds of changes in their portfolios that would drive up share prices.”