Taxes, regulations, and the value of U.S. and U.K. corporations

Review of Economic Studies

Volumn 72, Issue 3, 2005, Pages 767-796

  McGrattan, Ellen R ^a   Prescott, Edward C ^b  

^a UNIVERSITY OF MINNESOTA   (United States)

^b ARIZONA STATE UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

INDUSTRIAL INVESTMENT; INTERNATIONAL COMPARISON; TAX SYSTEM;

EID: 22144489469     PISSN: 00346527     EISSN: None     Source Type: Journal    
DOI: 10.1111/j.1467-937X.2005.00351.x     Document Type: Article

References (67)

1. ABEL, A. B. (2003), "The Effects of a Baby Boom on Stock Prices and Capital Accumulation in the Presence of Social Security", Econometrica, 71, 551-578.
2. ALVAREZ, F. and JERMANN, U. (2001), "Quantitative Asset Pricing Implications of Endogenous Solvency Constraints", Review of Financial Studies, 14, 1117-1151.
3. ARROW, K. J. (1962), "The Economic Implications of Learning by Doing", Review of Economic Studies, 29, 155-173.
4. AUERBACH, A. J. (1983a), "Taxation, Corporate Financial Policy and the Cost of Capital", Journal of Economic Literature, 21, 905-940.
5. AUERBACH, A. J. (1983b), "Corporate Taxation in the United States", Brookings Papers on Economic Activity, 2, 451-505.
6. AUERBACH, A. J. (2002), "Taxation and Corporate Financial Policy", in A. J. Auerbach and M. S. Feldstein (eds.) Handbook of Public Economics, Vol. 3 (New York: Elsevier North-Holland) 1251-1292.
7. BAXTER, M. and JERMANN, U. (1997), "The International Diversification Puzzle Is Worse Than You ThinkW", American Economic Review, 87, 170-180.
8. BITTKER, B. I. and EUSTICE, J. S. (2000) Federal Income Taxation of Corporations and Shareholders, 7th edition (Valhalla, NY: Warren, Gorham, and Lamont).
9. BOND, S., CHENNELLS, L. and DEVEREUX, M. (1996), "Company Dividends and Taxes in the UK", Fiscal Studies, 16, 1-18.
10. BOYD, J. H. and JAGANNATHAN, R. (1994), "Ex-Dividend Price Behavior of Common Stocks", The Review of Financial Studies, 7, 711-741.
11. CAMPBELL, J. Y. and SHILLER, R. J. (2001), "Valuation Ratios and the Long-Run Stock Market Outlook: An Update" (Working Paper 8221, NBER).
12. CONSTANTINIDES, G. M., DONALDSON, J. B. and MEHRA, R. (2002), "Junior Can't Borrow: A New Perspective of the Equity Premium Puzzle", Quarterly Journal of Economics, 117, 269-296.
13. CORRADO, C., HULTEN, C. R. and SICHEL, D. E. (2005), "Measuring Capital and Technology: An Expanded Framework", in C. Corrado, J. Haltiwanger and D. Sichel (eds.) Measuring Capital in the New Economy (Chicago: University of Chicago Press).
14. DONALDSON, J. B. and MEHRA, R. (1984), "Comparative Dynamics of an Equilibrium Intertemporal Asset Pricing Model", Review of Economic Studies, 51, 491-508.
15. ELTON, E. J. and GRUBER, M. J. (1970), "Marginal Stockholder Tax Rates and the Clientele Effect", The Review of Economics and Statistics, 52, 68-74.
16. FEDERAL RESERVE BOARD OF GOVERNORS (1945-2002) Flow of Funds Accounts of the United States (Washington, DC: Federal Reserve Board).
17. FEENBERG, D. R. and COUTTS, E. (1993), "An Introduction to the TAXSIM Model", Journal of Policy Analysis and Management, 12, 189-194.
18. FELDSTEIN, M. (1980), "Inflation and the Stock Market", American Economic Review, 70, 839-847.
19. FULLERTON, D. and KARAYANNIS, M. (1993), "United States", in D. W. Jorgenson and R. Landau (eds.) Tax Reform and the Cost of Capital, Chapter 10 (Washington, DC: Brookings Institution) 333-367.
20. GREENSPAN, A. (1996), "The Challenge of Central Banking in a Democratic Society", Francis Boyer Lecture of American Enterprise Institute for Public Policy Research, 5 December (Washington, DC: Federal Reserve Board).
21. GREENWOOD, J. and JOVANOVIC, B. (1999), "The Information-Technology Revolution and the Stock Market", American Economic Review, 89, 116-122.
22. GRULLON, G. and MICHAELY, R. (2002), "Dividends, Share Repurchases, and the Substitution Hypothesis", Journal of Finance, 57, 1649-1684.
23. HALL, R. E. (2001), "The Stock Market and Capital Accumulation", American Economic Review, 91, 1185-1202.
24. HAYASHI, F. (1982), "Tobin's Marginal q and Average q: A Neoclassical Interpretation", Econometrica, 50, 213-224.
25. HEATON, J. and LUCAS, D. (1999), "Stock Prices and Fundamentals", in O. J. Blanchard and S. Fisher (eds.) NBER Macroeconomics Annual 1999 (Cambridge, MA: MIT Press) 213-242.
26. HILL, I. and TAYLOR, R. (2001), Recent Trends in Dividends Payments and Share Buy-Backs, Economic Trends, February (London: The Stationery Office), 567, 42-44.
27. HOBIJN, B. and JOVANOVIC, B. (2001), "The Information-Technology Revolution and the Stock Market: Evidence", American Economic Review, 91, 1203-1220.
28. INVESTMENT COMPANY INSTITUTE (2003), "Mutual Funds and the U.S. Retirement Market in 2002", Fundamentals, 12, 1-15.
29. IRWIN, D. and KLENOW, P. J. (1994), "Learning-by-Doing Spillovers in the Semiconductor Industry", Journal of Political Economy, 102, 1200-1227.
30. JERMANN, U. J. (1998), "Asset Pricing in Production Economies", Journal of Monetary Economics, 41, 257-275.
31. KING, M. A. (1977) Public Policy and the Corporation (London, UK: Chapman and Hall).
32. KING, M. A. and FULLERTON, D. (eds.) (1984) The Taxation of Income from Capital: A Comparative Study of the United States, the United Kingdom, Sweden, and West Germany (Chicago: University of Chicago Press).
33. KING, M. A. and ROBSON, M. H. (1993), "United Kingdom", in D. W. Jorgenson and R. Landau (eds.) Tax Reform and the Cost of Capital, Chapter 9 (Washington, DC: Brookings Institution) 300-332.
34. LAITNER, J. and STOLYAROV, D. (2003), "Technological Change and the Stock Market", American Economic Review, 93, 1240-1267.
35. LONDON STOCK EXCHANGE (2002), Historical Statistics, http://www. londonstockexchange.com/market/historic.asp.
36. LUCAS, R. E., Jr. and PRESCOTT, E. C. (1971), "Investment Under Uncertainty" Econometrica, 39, 659-681.
37. McGRATTAN, E. R. and PRESCOTT, E. C. (2000), "Is the Stock Market Overvalued?", Federal Reserve Bank of Minneapolis Quarterly Review, 24, 20-40.
38. McGRATTAN, E. R. and PRESCOTT, E. C. (2001), "Taxes, Regulations, and Asset Prices" (Working Paper 610, Federal Reserve Bank of Minneapolis).
39. McGRATTAN, E. R. and PRESCOTT, E. C. (2003a), "Average Debt and Equity Returns: Puzzling?", American Economic Review, 93, 392-397.
40. McGRATTAN, E. R. and PRESCOTT, E. C. (2003b), "Data Appendix: Taxes, Regulations, and the Value of U.S. and U.K. Corporations" (Staff Report 309, Federal Reserve Bank of Minneapolis).
41. MOSKOWITZ, T. J. and VISSING-JORGENSEN, A. (2002), "The Returns to Entrepreneurial Investment: A Private Equity Premium Puzzle", American Economic Review, 92, 745-778.
42. MOYLE, J. (1971), "The Pattern of Ordinary Share Ownership", Department of Applied Economics, Occasional Paper 31 (Cambridge, UK: Cambridge University Press).
43. NATIONAL SCIENCE FOUNDATION (1953-2002) National Patterns of R&D Resources (Washington, DC: National Science Foundation).
44. PERALTA-ALVA, A. (2003), "Technical Change and U.S. Stock Market Movements" (Ph.D. Diss., University of Minnesota).
45. POTERBA, J. M. (2002), "Taxation, Risk-Taking, and Household Portfolio Behavior", in A. J. Auerbach and M. S. Feldstein (eds.) Handbook of Public Economics, Vol. 3 (New York: Elsevier North-Holland) 1109-1171.
46. POTERBA, J. M. and SUMMERS, L. H. (1984), "New Evidence that Taxes Affect the Valuation of Dividends", Journal of Finance, 39, 1297-1415.
47. POTERBA, J. M. and SUMMERS, L. H. (1985), "The Economic Effects of Dividend Taxation", in E. I. Altman and M. G. Subrahmanyam (eds.) Recent Advances in Corporate Finance (Homewood, IL: Irwin) 227-284.
48. PRESCOTT, E. C. and VISSCHER, M. (1980), "Organization Capital", Journal of Political Economy, 88, 446-461.
49. QUADRINI, V. and RIOS-RULL, J.-V. (1997), "Understanding the U.S. Distribution of Wealth", Federal Reserve Bank of Minneapolis Quarterly Review, 21, 22-36.
50. REVELL, J. (1967) The Wealth of the Nation: The National Balance Sheet of the United Kingdom, 1957-1961, Department of Applied Economics, Monograph 14 (Cambridge, UK: Cambridge University).
51. ROE, A. (1971) The Financial Interdependence of the Economy (London: Chapman and Hall).
52. ROUWENHORST, K. G. (1995), "Asset Pricing Implications of Equilibrium Business Cycle Models", in T. F. Cooley (ed.) Frontiers of Business Cycle Research (Princeton, NJ: Princeton University Press) 294-330.
53. SHILLER, R. J. (2000) Irrational Exuberance (Princeton, NJ: Princeton University Press).
54. SHIRLEY, P. (1997), "Share Repurchases", Fiscal Studies, 18, 211-221.
55. SINN, H.-W. (1991), "Taxation and the Cost of Capital: The 'Old' View, the 'New' View, and Another View", in D. Bradford (ed.) Tax Policy and the Economy, Vol. 5 (Cambridge, MA: MIT Press) 25-54.
56. STOCK EXCHANGE (1982) The Stock Exchange Survey of Share Ownership (London: Stock Exchange Publications).
57. STONE, R., REVELL, J. and MOYLE, J. (1966) The Owners of Quoted Ordinary Shares: A Survey for 1963 (London: Chapman and Hall).
58. SUMMERS, L. H. (1981), "Taxation and Corporate Investment: A q -Theory Approach", Brookings Papers on Economic Activity, 1, 67-127.
59. U.K. CENTRAL STATISTICAL OFFICE (1971) National Income and Expenditure (London: Her Majesty's Stationery Office).
60. U.K. CENTRAL STATISTICAL OFFICE (1979) The Owners of Quoted Ordinary Shares: A Survey for 1975 (London: Her Majesty's Stationery Office).
61. U.K. INLAND REVENUE STATISTICS AND ECONOMICS OFFICE (1970-2002) Inland Revenue Statistics (London: Her Majesty's Stationery Office).
62. U.K. OFFICE FOR NATIONAL STATISTICS (1987, 1997, 2002) United Kingdom National Accounts, The Blue Book (London: The Stationery Office).
63. U.K. OFFICE FOR NATIONAL STATISTICS (1994, 1997-2002) Share Ownership: A Report on the Ownership of Shares at 31st of December (London: The Stationery Office).
64. U.K. OFFICE FOR NATIONAL STATISTICS (2002) United Kingdom Balance of Payments, The Pink Book (London: The Stationery Office).
65. U.S. DEPARTMENT OF COMMERCE and BUREAU OF ECONOMIC ANALYSIS (1929-2002) Survey of Current Business (Washington, DC: U.S. Government Printing Office).
66. U.S. DEPARTMENT OF THE TREASURY and INTERNAL REVENUE SERVICE (1955-2000) Statistics of Income (Washington, DC: U.S. Government Printing Office).
67. UNIVERSAL McCANN (1929-2000) Bob Coen's Insider's Report (New York: McCann-Erickson World Group).