Journal of Finance Vol. 70 No. 2 2015
The Effect of Succession Taxes on Family Firm Investment: Evidence from a Natural Experiment
Abstract
This paper provides causal evidence on the impact of succession taxes on firm investment decisions and transfer of control. Using a 2002 policy change in Greece that substantially reduced the tax on intrafamily transfers of businesses, I show that succession taxes lead to a more than 40% decline in investment around family successions, slow sales growth, and a depletion of cash reserves. Furthermore, succession taxes strongly affect the decision to sell or retain the firm within the family. I conclude by discussing implications of my findings for firms in the United States and Europe.
- DOI
- 10.1111/jofi.12224
- Volume
- 70
- Issue
- 2
- Pages
- 649-688
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref