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Government Policy and Ownership of Equity Securities

39 Pages Posted: 2 Jul 2009 Last revised: 1 Jan 2013

Kristian Rydqvist

State University of New York at Binghamton - School of Management; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Joshua D. Spizman

Loyola Marymount University - Department of Finance and Computer Information Systems

Ilya A. Strebulaev

Stanford University - Graduate School of Business; National Bureau of Economic Research

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Date Written: November 11, 2012

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Since World War II, direct stock ownership by households has largely been replaced by indirect stock ownership by financial institutions.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 Classification: G10, G20, H22, H30

Suggested Citation

Rydqvist, Kristian and Spizman, Joshua D. and Strebulaev, Ilya A., Government Policy and Ownership of Equity Securities (November 11, 2012). ECGI - Finance Working Paper No. 263/2009; Paris December 2009 Finance International Meeting AFFI - EUROFIDAI. Available at SSRN: https://ssrn.com/abstract=1428442 or http://dx.doi.org/10.2139/ssrn.1428442

Kristian Rydqvist (Contact Author)

State University of New York at Binghamton - School of Management ( email )

P.O. Box 6015
Binghamton, NY 13902-6015
United States
607-777-2673 (Phone)
607-777-4422 (Fax)

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Joshua D. Spizman

Loyola Marymount University - Department of Finance and Computer Information Systems ( email )

Los Angeles, CA 90045
United States
(310) 338-2902 (Phone)

Ilya A. Strebulaev

Stanford University - Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

HOME PAGE: http://faculty-gsb.stanford.edu/strebulaev/

National Bureau of Economic Research ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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