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Title:The effect of Germany's repeal of the corporate capital gains tax: Evidence from the disposal of corporate minority holdings PDF Logo
Authors:Rünger, Silke
Issue Date:2012
Series/Report no.:Arqus-Diskussionsbeiträge zur quantitativen Steuerlehre 126
Abstract: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.
Subjects:corporate capital gains
lock-in effect
corporate equity holdings
Germany
JEL:G11
G34
H25
H32
Document Type:Working Paper
Appears in Collections:arqus Diskussionsbeiträge zur Quantitativen Steuerlehre

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