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Conference of 2007
Finance Center Münster
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Since World War II, the fraction of stocks owned directly by households has decreased by more than 40 percentage points in the United States, the United Kingdom, Sweden, and Finland, and by more than 20 percentage points in Canada, Japan, Germany, and France. We argue that tax policy is the driving force. Using data from eight countries, we show that tax-favored investors have replaced households as stockholders and that the fraction of household ownership decreases with measures of the effective marginal tax rate. These findings are 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.
Abstract
The Evolution of Aggregate Stock Ownership---A Unified Explanation
Rydqvist, KristianSince World War II, the fraction of stocks owned directly by households has decreased by more than 40 percentage points in the United States, the United Kingdom, Sweden, and Finland, and by more than 20 percentage points in Canada, Japan, Germany, and France. We argue that tax policy is the driving force. Using data from eight countries, we show that tax-favored investors have replaced households as stockholders and that the fraction of household ownership decreases with measures of the effective marginal tax rate. These findings are 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.