Collateral Value and Entrepreneurship: Evidence from a Property Tax Reform

33 Pages Posted: 1 Sep 2022

See all articles by Miguel A. Ferreira

Miguel A. Ferreira

Nova School of Business and Economics; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

João Pereira dos Santos

University of Lisbon - ISEG School of Economics and Management; Nova School of Business and Economics

Ana Venâncio

ISEG Lisbon School of Economics and Management,Universidade de Lisboa

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Date Written: August 30, 2022

Abstract

We study the role of property taxes on entrepreneurial activity using a quasi-natural experiment, which unexpectedly reduced the upper bound of the Portuguese property tax rate for urban properties in 2008. Using a difference-in-differences approach, we nd that treated municipalities (i.e., municipalities that had a property tax rate above the new upper bound) experienced higher entry rates in the manufacturing sector vis-a-vis control municipalities (i.e., municipalities that had a property tax rate at or below the new upper bound). Taking advantage of rm-level data, we show that start-ups created as a response to the decrease in property taxes in treated municipalities use more debt, invest more, and are more likely to survive.

Keywords: Entrepreneurship, Property taxes, Savings, Portugal

JEL Classification: L26, H20, R30

Suggested Citation

Ferreira, Miguel Almeida and Pereira dos Santos, João and Venâncio, Ana, Collateral Value and Entrepreneurship: Evidence from a Property Tax Reform (August 30, 2022). Nova SBE Working Paper Series No. 643, 2022, Available at SSRN: https://ssrn.com/abstract=4205131 or http://dx.doi.org/10.2139/ssrn.4205131

Miguel Almeida Ferreira (Contact Author)

Nova School of Business and Economics ( email )

Campus de Carcavelos
Rua da Holanda, 1
Carcavelos, 2775-405
Portugal

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

João Pereira dos Santos

University of Lisbon - ISEG School of Economics and Management ( email )

Rua do Quelhas 6
Lisboa, 1200-781
Portugal

Nova School of Business and Economics ( email )

Campus de Carcavelos
Rua da Holanda, 1
Carcavelos, 2775-405
Portugal

Ana Venâncio

ISEG Lisbon School of Economics and Management,Universidade de Lisboa ( email )

Rua do Quelhas 6
LISBOA, 1200-781
Portugal

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