The effect of Germany's repeal of the corporate capital gains tax: Evidence from the disposal of corporate minority holdings
No 126, arqus Discussion Papers in Quantitative Tax Research from arqus - Arbeitskreis Quantitative Steuerlehre
Germany's repeal of the corporate capital gains tax for the disposal of domestic holdings was expected to substantially change the system of corporate network holdings and corporate control. Based on a general divestiture model, we show that the probability of a disposal increased after the tax reform. Using a unique data set with no need to proxy for the disposal of corporate equity holdings, we analyze 354 German minority holdings over the period 1999-2007. We find significant higher disposal rates for 2002, the year the reform became effective. Further analyses reveal that this effect can be attributed to non-listed parent companies outside the financial sector, i.e. companies mainly ignored in prior research. Thus, our results also help to explain why prior research using event studies failed to detect a widespread market reaction of German firms.
Keywords: corporate capital gains; lock-in effect; corporate equity holdings; Germany (search for similar items in EconPapers)
JEL-codes: G11 G34 H25 H32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc and nep-eur
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:arqudp:126
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