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The Rise and Decline of Industrial Foundations as Controlling Owners of Swedish Listed Firms: The Role of Tax Incentives
Research Institute of Industrial Economics (IFN), stockholm, Sweden.
Research Institute of Industrial Economics (IFN), stockholm, Sweden.ORCID iD: 0000-0002-5610-8526
Research Institute of Industrial Economics (IFN), stockholm, Sweden.
2019 (English)Report (Other academic)
Abstract [en]

Beginning in the interwar period, industrial foundations became a vehicle for the corporate control of large listed firms in Sweden, but in the 1990s they were replaced by wealthy individuals who either directly own controlling blocks or who own them through holding companies. We study potential explanations for this change and propose two taxation-related candidates: shifts in the relative effective taxation across owner types and the dismantling of the inheritance taxation that prevented the generational transfer of the ownership of large controlling blocks. Our analysis exploits newly computed marginal effective capital income tax rates across capital owners, accounting for all relevant factors, including rules governing tax exemptions. We show that the 1990–91 tax reform, abolition of the wealth tax for controlling owners in 1997, 2003 tax exemption of dividends and capital gains on listed stock for holding companies with a voting or equity share of at least 10 percent, and abolition of the inheritance and gift taxes in 2004 reversed the rules of the game. Recently, control has largely been wielded through direct ownership, and the role of foundations is rapidly declining. These findings point to the importance of tax incentives for the use of foundations as the control vehicles of listed firms.

Place, publisher, year, edition, pages
Stockholm: Research Institute of Industrial Economics (IFN) , 2019. , p. 30
Series
IFN Working Paper ; 1279
Keywords [en]
Corporate governance, Entrepreneurship, Family firms, Foundations, Owner-level taxation
National Category
Economics
Identifiers
URN: urn:nbn:se:oru:diva-80335OAI: oai:DiVA.org:oru-80335DiVA, id: diva2:1411140
Note

JEL codes: H20; K34; L26; N44.

Available from: 2020-03-03 Created: 2020-03-03 Last updated: 2020-03-10

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2122232425262724 of 226
CiteExportLink to record
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Citation style
  • apa
  • ieee
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  • vancouver
  • Other style
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Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
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  • asciidoc
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