TY  - JOUR
AU  - Desai,Mihir A.
AU  - Dharmapala,Dhammika
AU  - Fung,Winnie
TI  - Taxation and the Evolution of Aggregate Corporate Ownership Concentration
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11469
PY  - 2005
Y2  - July 2005
UR  - http://www.nber.org/papers/w11469
L1  - http://www.nber.org/papers/w11469.pdf
N1  - Author contact info:
Mihir A. Desai
Graduate School of Business Administration
Harvard University
Soldiers Field
Boston, MA 02163
Tel: 617/495-6693
Fax: 617/496-6592
E-Mail: mdesai@hbs.edu

Dhammika Dharmapala
University of Illinois College of Law
504 E. Pennsylvania Avenue
Champaign, IL 61820
E-Mail: dharmap@illinois.edu

Winnie Fung
Department of Business and Economics
Wheaton College
501 College Avenue
Wheaton, IL 60187
Tel: 630-752-7100
E-Mail: winnie.fung@wheaton.edu
M2  - featured in NBER digest on 2005-07-04
AB  - 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.
ER  -