Seminar with: Bogdan Stacescu, BI
"lliquid shareholders and real firm effects: The personal wealth tax and financial constraints"
Place: Pilestredet 35, rom: Pi 744 Date and time: Thursday 11. October 2018 12:03 - 13.30
Abstract: We examine how personal liquidity shocks at the individual investor level propagate as financial and real effects to the firm the investor controls. Using shocks to the taxation of personal wealth in Norway over eleven years, we show that increased tax valuation of residential real estate, which increase owners’ tax liability, is associated with higher dividend and salary payments from the firm to its owners, lower cash holdings in the firm, and lower firm growth. These results suggest that personal liquidity and corporate liquidity are causally related in private firms with concentrated ownership, and that personal taxation of non-firm assets has real effects in the firm.