Taxation and the Evolution of Aggregate Corporate Ownership Concentration / Mihir A. Desai, Dhammika Dharmapala, Winnie Fung.

Format:

Book

Author/Creator:

Desai, Mihir A.

Contributor:

National Bureau of Economic Research.

Dharmapala, Dhammika.

Fung, Winnie.

Series:

Working Paper Series (National Bureau of Economic Research) no. w11469.

NBER working paper series no. w11469

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2005.

Summary:

Legal rules, politics and behavioral factors have all been emphasized as explanatory factors in analyses of the determinants of the concentration of corporate ownership and stock market participation. An extension of standard tax clientele arguments demonstrates that changes in the progressivity of taxes can also significantly influence patterns of equity ownership. A novel index of the concentration of corporate ownership over the twentieth century in the U.S. provides the opportunity to quantitatively test for the role of taxes in shaping ownership concentration. The index of ownership concentration is characterized by considerable time series variation, with significant diffusion of ownership in the post WWII era and reconcentration in the late 1990s. Analysis of this index indicates that the progressivity of taxation significantly influences corporate ownership concentration and equity market participation as predicted by the model. This evidence supports the intuition of Berle and Means (1932) that taxation can significantly influence patterns of equity ownership.

Notes:

Print version record

July 2005.