Government Policy and Ownership of Financial Assets

Government Policy and Ownership of Financial Assets

Since World War II, direct stock ownership by households across the globe has largely been replaced by indirect stock ownership by financial institutions.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 tax-deferred plans. 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.

Kristian Rydqvist, Joshua Spizman, and Ilya A. Strebulaev

Journal of Financial Economics

October 2011

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By |2018-01-01T00:00:00-08:00January 1st, 2018|Financial Regulation, Reference, Reforms|