Forthcoming and accepted Papers
Journal of Finance, forthcoming
Winner of the Trefftzs Award, WFA 2010
Abstract: The paper provides causal evidence on the impact of succession taxes on firm investment decisions and transfer of control. I exploit a 2002 policy change in Greece that repealed the tax on intra-family transfers of businesses and show that succession taxes lead to more than a 40% decline in investment around family successions, slow total asset growth and depletion of cash reserves. Furthermore, succession taxes strongly affect the decision to sell or retain the firm within the family. These findings have broad implications since 40% of privately held firms in the US and Europe will undergo succession in the next decade.
with Vyacheslav Fos
Accepted Journal of Financial Economics
This paper shows that proxy contests have a significant adverse effect on careers of incumbent directors. Following a proxy contest, directors experience a significant decline in number of directorships not only in the targeted company, but also in other non-targeted companies. The results are established using the universe of all proxy contests during 1996-2010. To establish that this effect of proxy contests is causal, we use within-firm variation in directors' exposure to proxy contests and exploit the predetermined schedule of staggered boards that only allows a fraction of directors to be nominated for election every year. We find that nominated directors relative to non-nominated ones lose 45% more seats on other boards. We discuss that this pattern can be expected if proxy contest mechanism imposes a significant career cost on incumbent directors.
Tax Evasion across Industries: Soft Credit Evidence from Greece
with Nikolaos Artavanis and Adair Morse
Winner of the Wharton School-WRDS Award for the Best Empirical Finance Paper, WFA 2013
Abstract: We begin with the new observation that banks lend to tax-evading individuals based on the bank's perception of true income. This insight leads to a novel approach to estimate tax evasion from private-sector adaptation to semiformality. We use household microdata from a large bank in Greece and replicate bank models of credit capacity, credit card limits, and mortgage payments to infer the bank’s estimate of individuals’ true income. We estimate a lower bound of 28 billion euros of unreported income for Greece. The foregone government revenues amount to 31 percent of the deficit for 2009. Primary tax-evading occupations are doctors, engineers, private tutors, accountants, financial service agents, and lawyers. Testing the industry distribution against a number of redistribution and incentive theories, our evidence suggests that industries with low paper trail and industries supported by parliamentarians have more tax evasion. We conclude by commenting on the property right of informal income.
Life without Foreclosures" (with Adair Morse)
New -- Preliminary Working Paper Available. Please email me
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