The Wealth Tax’ Impact on Stock Exchange Listings : A comparative case study of wealth tax abolition’s effect on stock exchange listings through the synthetic control method

Fagerbakk, Kristoffer M.; Tilley, Sindre G.
Master thesis
Thumbnail
View/Open
URI
https://hdl.handle.net/11250/2981964
Date
2021
Metadata
Show full item record
Collections
Abstract
The valuation basis for the wealth tax generally differs between listed and non-listed

companies, where listed companies are valued at market value and non-listed companies are

valued at book value. We analyze the 2007 wealth tax abolishment in Sweden. We find that

the wealth tax abolishment in Sweden led to a persistent increase in the number of listed

companies. Through the synthetic control method, we estimate a final increase in 2012 of

62% more listed companies compared to a scenario where Sweden kept its wealth tax. This

increase corresponds to 13 more listed companies per million capita. Furthermore, through a

fixed effects regression we also find the relationship between the wealth tax abolishment and

the number listed companies in Sweden significant at the 1% level. Our findings from

analyzing Sweden suggest that a wealth tax can discourage companies from going public.

Nevertheless, the generalizability of our result is uncertain.