Does differential taxation of short-term relative to long-term capital gains affect long-term investment?

Jahr: 2022

Typ: Journal Publication

Fachzeitschrift: Journal of Accounting and Economics

Abstract

Pressure from short-horizon investors can hurt investments in innovative, long-run value-increasing projects. We explore the efficacy of a commonly proposed tax-based policy tool to mitigate this problem: the imposition of differentially greater taxes on short-term capital gains vis-à-vis long-term capital gains. Using a panel of 30 OECD countries in which seven countries exhibit 21 changes to differential capital gains taxation over 1991-2006, we find that rewarding longer-term ownership through lower taxes is associated with greater innovation. The evidence adds to our understanding of the real effects of taxation on investor trading and informs the debate on the use of capital gains taxes to address corporate myopia.

Veröffentlichungsinformationen

TRR 266 researchers

Martin Jacob IESE Business School

External researchers

Eric He

Rahul Vashishtha

Mohan Venkatachalam

Issue Number

Volume Number

DOI

DOI Link

To cite this article

He, E., Jacob, M., Vashishtha, R., & Venkatachalam, M. (2022). Does differential taxation of short-term relative to long-term capital gains affect long-term investment?. Journal of Accounting and Economics, 74 (1). https://doi.org/10.1016/j.jacceco.2022.101479

Zugehörige Projekte

B01

Investment Effects of Multidimensional Taxation

Beteiligte Institutionen

Die Hauptstandorte vom TRR 266 sind die Universität Paderborn (Sprecherhochschule), die HU Berlin und die Universität Mannheim. Alle drei Standorte sind seit vielen Jahren Zentren für Rechnungswesen- und Steuerforschung. Hinzu kommen Wissenschaftler der LMU München, der Frankfurt School of Finance and Management, der Goethe-Universität Frankfurt, der Universität zu Köln und der Leibniz Universität Hannover, die die gleiche Forschungsagenda verfolgen.