Taxation and the Evolution of Aggregate Corporate Ownership Concentration

40 Pages Posted: 9 Aug 2005

See all articles by Mihir A. Desai

Mihir A. Desai

Harvard Business School - Finance Unit; National Bureau of Economic Research (NBER)

Dhammika Dharmapala

UC Berkeley School of Law; CESifo (Center for Economic Studies and Ifo Institute); European Corporate Governance Institute (ECGI)

Winnie Fung

Wheaton College

Multiple version iconThere are 2 versions of this paper

Date Written: July 2005

Abstract

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.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Suggested Citation

Desai, Mihir A. and Dharmapala, Dhammika and Fung, Winnie, Taxation and the Evolution of Aggregate Corporate Ownership Concentration (July 2005). NBER Working Paper No. W11469, Available at SSRN: https://ssrn.com/abstract=755705

Mihir A. Desai (Contact Author)

Harvard Business School - Finance Unit ( email )

Boston, MA 02163
United States
617-495-6693 (Phone)
617-496-6592 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Dhammika Dharmapala

UC Berkeley School of Law ( email )

302 JSP
2240 Piedmont Ave
Berkeley, CA 94720
United States

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Winnie Fung

Wheaton College ( email )

501 College Ave
Wheaton, IL 60187
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
81
Abstract Views
1,729
Rank
78,816
PlumX Metrics