Government policy and ownership of equity securities

Kristian Rydqvist, Joshua Spizman and Ilya Strebulaev

Journal of Financial Economics, 2014, vol. 111, issue 1, 70-85

Abstract: Since World War II, direct stock ownership by households across the globe has largely been replaced by indirect stock ownership by financial institutions.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 and retirement policies are among the factors behind these changes. We develop empirical measures of two tax incentives of holding stocks inside tax-deferred plans, tax-free investment income and the smoothing benefit. Using long time-series from eight countries, we show that the fraction of household ownership decreases with these measures of the tax benefits. This finding contributes to policy debates on effective taxation and to financial economics research on the long-term effects of taxation on corporate finance and asset prices.

Keywords: Stock ownership; Mutual funds; Pension funds; Tax-deferral (search for similar items in EconPapers)
JEL-codes: G23 G28 H22 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (26)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:111:y:2014:i:1:p:70-85

DOI: 10.1016/j.jfineco.2013.09.001

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