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The effect of Germany's Tax Reform Act 2001 on corporate ownership: Insights from disposals of minority blocks

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  • Rünger, Silke
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    Abstract

    The German tax reform act 2001 changed the corporate tax system from a full imputation system to a half income system. Along with this change, the taxation of equity investments changed as well. Using data on 459 disposals of minority blocks over the period 1997-2006, this paper analyzes the effect of TRA 2001 on the demand for corporate shares of different owner types and on corporate ownership concentration. We show that TRA 2001 was able to fulfill government's expectations about an increase in blocks bought by individual owners. With respect to ownership concentration, we find tax incentives not to be strong enough to lead to a reduction in overall concentration of corporate ownership. --

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    Bibliographic Info

    Paper provided by arqus - Arbeitskreis Quantitative Steuerlehre in its series arqus Discussion Papers in Quantitative Tax Research with number 114.

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    Date of creation: 2011
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    Handle: RePEc:zbw:arqudp:114

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    Keywords: corporate ownership; marginal tax rate on equity; minority blocks; Germany;

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    1. Mihir A. Desai & William M. Gentry, 2003. "The Character and Determinants of Corporate Capital Gains," Department of Economics Working Papers 2003-04, Department of Economics, Williams College.
    2. Mihir A. Desai & Dhammika Dharmapala & Winnie Fung, 2005. "Taxation and the Evolution of Aggregate Corporate Ownership Concentration," NBER Working Papers 11469, National Bureau of Economic Research, Inc.
    3. Becht, Marco & Roell, Ailsa, 1999. "Blockholdings in Europe:: An international comparison1," European Economic Review, Elsevier, vol. 43(4-6), pages 1049-1056, April.
    4. Leech, Dennis & Leahy, John, 1991. "Ownership Structure, Control Type Classifications and the Performance of Large British Companies," Economic Journal, Royal Economic Society, vol. 101(409), pages 1418-37, November.
    5. Weber, Anke, 2009. "An empirical analysis of the 2000 corporate tax reform in Germany: Effects on ownership and control in listed companies," International Review of Law and Economics, Elsevier, vol. 29(1), pages 57-66, March.
    6. Julio Pindado & Chabela de la Torre, 2006. "The Role of Investment, Financing and Dividend Decisions in Explaining Corporate Ownership Structure: Empirical Evidence from Spain," European Financial Management, European Financial Management Association, vol. 12(5), pages 661-687.
    7. Roger H. Gordon & Jeffrey K. MacKie-Mason, 1990. "Effects of the Tax Reform Act of 1986 on Corporate Financial Policy and Organizational Form," NBER Working Papers 3222, National Bureau of Economic Research, Inc.
    8. Øyvind Bøhren & Bernt Arne Ødegaard, 2001. "Patterns of Corporate Ownership: Insights from a unique data set," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 27, pages 55-86.
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