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The evolution of aggregate stock ownership

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  • Rydqvist, Kristian
  • Spizman, Joshua
  • Strebulaev, Ilya
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    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    Since World War II, direct stock ownership by households has largely been replaced by indirect stock ownership by financial institutions.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. --

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    File URL: http://econstor.eu/bitstream/10419/57351/1/66759728X.pdf
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    Bibliographic Info

    Paper provided by Center for Financial Studies (CFS) in its series CFS Working Paper Series with number 2011/18.

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    Date of creation: 2011
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    Handle: RePEc:zbw:cfswop:201118

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    Keywords: Capital Gains Tax; Income Tax; Stock Ownership; Bond Ownership; Inflation; Bracket Creep; Pension Funds;

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    1. Perotti, Enrico & Schwienbacher, Armin, 2009. "The political origin of pension funding," Journal of Financial Intermediation, Elsevier, Elsevier, vol. 18(3), pages 384-404, July.
    2. Auerbach, Alan J & King, Mervyn A, 1983. "Taxation, Portfolio Choice, and Debt-Equity Ratios: A General Equilibrium Model," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 98(4), pages 587-609, November.
    3. Chetty, Raj & Saez, Emmanuel, 2004. "Dividend Taxes and Corporate Behaviour: Evidence from the 2003 Dividend Tax Cut," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4722, C.E.P.R. Discussion Papers.
    4. James M. Poterba & Andrew Samwick, 1999. "Taxation and Household Portfolio Composition: U.S. Evidence from the 1980s and 1990s," NBER Working Papers 7392, National Bureau of Economic Research, Inc.
    5. Irwin Tepper, 1981. "Taxation and Corporate Pension Policy," NBER Working Papers 0661, National Bureau of Economic Research, Inc.
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    14. Robert M. Dammon & Chester S. Spatt & Harold H. Zhang, 2004. "Optimal Asset Location and Allocation with Taxable and Tax-Deferred Investing," Journal of Finance, American Finance Association, American Finance Association, vol. 59(3), pages 999-1037, 06.
    15. Julian Franks & Colin Mayer & Hannes Wagner, 2006. "The Origins of the German Corporation - Finance, Ownership and Control," Review of Finance, European Finance Association, European Finance Association, vol. 10(4), pages 537-585, December.
    16. Miller, Merton H, 1977. "Debt and Taxes," Journal of Finance, American Finance Association, American Finance Association, vol. 32(2), pages 261-75, May.
    17. J. B. Chay & Dosoung Choi & Jeffrey Pontiff, 2006. "Market Valuation of Tax-Timing Options: Evidence from Capital Gains Distributions," Journal of Finance, American Finance Association, American Finance Association, vol. 61(2), pages 837-865, 04.
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