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Title:Political rights, taxation, and firm valuation: Evidence from Saxony around 1900 PDF Logo
Authors:Lehmann, Sibylle H.
Hauber, Philipp
Opitz, Alexander
Issue Date:2012
Series/Report no.:FZID Discussion Papers 59-2012
Abstract:The extension of the franchise to social groups with less property and income is associated with greater income redistribution from the rich to the poor and extension in the provision of public goods, which leads to the growth of government expenditure. All of these expected changes are costly and therefore a higher taxation of citizens and industrial firms can be expected, which might have negative effects on investors behavior. The present paper studies the effects of changes in the suffrage in the Kingdom of Saxony at the end of the 19th Century on stock market prices of Saxon firms listed on the Berlin stock exchange: Here the electoral law was changed twice: In 1896 a very restrictive franchise was introduced, which was abolished in 1909 and replaced by a more democratic electoral law. By applying standard event study methodology, we can provide evidence that the restriction of the electoral law had positive effects on Saxon firms on the stock market, whereby the extension in 1909 had negative effects on the stock market.
Subjects:Financial History
Taxation
Stock Markets
Event Study
Investors
Suffrage
Elections
JEL:G11
G14
G18
D72
N23
N43
Persistent Identifier of the first edition:urn:nbn:de:bsz:100-opus-7761
Document Type:Working Paper
Appears in Collections:FZID Discussion Papers, Universität Hohenheim

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