Government policy and ownership of equity securities

Rydqvist, Kristian; Spizman, Joshua D.; Strebulaev, Ilya A.

doi:10.1016/j.jfineco.2013.09.001

Cited by 75 publications

(42 citation statements)

References 29 publications

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“…They also document that most investors use proxy advisers for voting. Rydqvist, Spizman, and Strebulaev (2014) argue that the transition from direct ownership to indirect stock ownership of stocks through institutional investors is driven by tax and retirement policies. Adams and Ferreira (2008) survey the empirical literature relating ownership and control.…”

Section: Literature Reviewmentioning

confidence: 99%

Testing for Competitive Effects of Common Ownership

Gramlich

Grundl

2017

FEDS

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We propose an alternative approach for analyzing the competitive effects of common ownership: to directly analyze the weights that firms place on each others' profits rather than using measures of industry concentration (MHHI and GHHI). Analyzing weights has at least three advantages: it places fewer restrictions on the nature of competition, it requires less data to test, and it circumvents endogeneity concerns with concentration measures.We apply our approach to data from the banking industry, and our preliminary results mixed and overall rather muted. The sign of the competitive effect is sensitive to specification, and the effects we estimate are economically quite small.Firms upon which significant weight is placed -either by themselves or competitors -move very little in price or quantity distributions. PRELIMINARY -PLEASE DO NOT CITE OR DISTRIBUTE WITHOUT PERMISSIONJEL Codes:

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Section: Literature Reviewmentioning

confidence: 99%

Testing for Competitive Effects of Common Ownership

Gramlich

Grundl

2017

FEDS

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“…With regard to the U.S. public equity markets, the conventional estimation (which is already a bit dated) is that seventy to eighty percent of shares publicly traded in the United States are held by institutional investors. 199 …”

Section: B Rise Of the Institutional Investormentioning

confidence: 99%

Unicorns, Guardians, and the Concentration of the U.S. Equity Markets

Westbrook,

Westbrook

2017

SSRN Journal

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“…20 Rydqvist et al (2014) examined the long-term significance of taxation on development in eight countries and found that high ownership taxes caused a shift in savings to pension funds and other tax-deferred, institutional investments. These authors concluded that individuals made these investment shifts -which produced lower or tax-deferred returns -to reduce or delay their tax obligations.…”

Section: The Old or The New View Of Firm Taxation: What Does The Empimentioning

confidence: 99%

“…Rydqvist et al (2014) revealed that dividend taxation relative to other ownership taxation exerts a stronger influence on the shift toward institutional ownership. These authors did not analyze the significance of ownership taxation in terms of increased foreign ownership separately, but they did note that investment in shares shifted from natural persons to both domestic and foreign institutional investors.…”

Section: The Old or The New View Of Firm Taxation: What Does The Empimentioning

confidence: 99%

Owner-Level Taxes and Business Activity

Henrekson

Sanandaji

2016

FNT in Entrepreneurship

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract: In some classes of models, taxes at the owner level are "neutral" and have no effect on firm activity. However, this tax neutrality is sensitive to assumptions and no longer holds in more complex models. We review recent research that incorporates greater complexity in studying the link between taxes and business activity -particularly entrepreneurship. Terms of use: Documents inDividend taxes on owners of large firms affect firm activity in models that include agency conflicts between owners and managers. Similarly, after incorporating entrepreneurs' occupational choice into the model, taxes are no longer neutral. By forsaking lucrative alternative careers, skilled entrepreneurs tend to have high opportunity costs, which make the choice of attempting to start a business of first order importance. Moreover, in models where it is assumed that capital flows across borders without cost, taxes on domestic business owners do not alter business activity because foreign capital seamlessly compensates for tax-induced declines in investments. This theoretical notion is contradicted by the strong "home bias" observed in business ownership, in particular for small firms and startups without easy access to international capital markets.Recent empirical work has emphasized that taxes have heterogeneous effects on mature firms, entrepreneurial startups, and owner-managed small firms. Lowering dividend taxes on firms with dispersed ownership has been shown to shift capital from mature firms into rapidly growing firms. Moreover, capital gains taxation tends to reduce the number of innovative startups and diminish venture capital activity, while high owner-level taxes encourage small business activity and nonentrepreneurial self-employment because such firms have more opportunities to avoid or evade taxes.To obtain efficient incentives in entrepreneurial startups, contractual terms are required that ex ante guarantee that all providers of critical inputs, especially equity constrained entrepreneurs, are entitled to a share of the resulting capital value firm. Unless properly designed, owner-level taxes prevent such ex ante contracting and thus lower the likelihood of eventual success.

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Government policy and ownership of equity securities

Cited by 75 publications

References 29 publications

Testing for Competitive Effects of Common Ownership

Testing for Competitive Effects of Common Ownership

Unicorns, Guardians, and the Concentration of the U.S. Equity Markets

Owner-Level Taxes and Business Activity

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