“Shareholder illiquidity and firm behavior: Financial and real effects of the personal wealth tax in private firms” by Janis Berzins – BI Norwegian Business School

August 9, 2019

05 September 2019Online events
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Janis Berzins –

BI Norwegian Business School

Date and Location

Thursday, September 5th, 2019 – 14:00 – 15:30

Visioconference: Paris (P305) and Lille (R217)


We examine how negative liquidity shocks to shareholders propagate to firms. Analyzing regulatory shocks to personal wealth taxation in Norway, we show that higher taxes on the home of a private firm’s controlling shareholder are associated with higher dividend and salary payments from the firm to the shareholder, lower cash holdings in the firm, and lower firm growth. A one percentage-point increase in the shareholder’s wealth-tax-to-liquid-assets ratio is on average followed by a half percentage-point increase in the dividends-to-earnings ratio and a half percentage-point decrease in sales growth. These findings suggest that shareholder illiquidity has causal effects on firm behavior.

Authors: Janis Berzins, Øyvind Bøhren, Bogdan Stacescu – BI Norwegian Business School

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