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The Evolution of Aggregate Stock Ownership - A Unified Explanation
Kristian Rydqvist SUNY at Binghamton - School of Management; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI) Joshua D. Spizman University of Central Florida - Department of Finance; SUNY at Binghamton - School of Management Ilya A. Strebulaev Stanford University - Graduate School of Business July 1, 2009 ECGI - Finance Working Paper No. 263/2009 Paris December 2009 Finance International Meeting AFFI - EUROFIDAI Abstract: Since World War II, direct stock ownership by households has largely been replaced by indirect stock ownership by financial institutions. We argue that tax policy is the driving force. Using long time-series from eight countries, we show that the fraction of household ownership decreases with measures of the tax benefits of holding stocks inside a pension plan. This finding is important for policy considerations on effective taxation and for financial economics research on the long-term effects of taxation on corporate finance and asset prices.
Keywords: Capital gains tax, income tax, stock ownership, inflation, bracket creep, pension funds JEL Classifications: G10, G20, H22, H30 Working Paper SeriesDate posted: July 02, 2009 ; Last revised: October 26, 2009Suggested CitationContact Information
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